Lotilla says Kuwait may invest in RP’s downstream oil sector

After venturing into upstream oil exploration in the Philippines, the Kuwaiti government is now planning to invest in the country’s downstream oil sector, Energy Secretary Raphael P.M. Lotilla said.

He told reporters that this possibility cropped up during a recent meeting of energy ministers in Riyadh.

“I assured Kuwait ’s Petroleum Minister Sheikh Ali-Al-Jarrah Al-Sabah that Kuwaiti investments in the upstream and downstream sectors in the Philippines are most welcome,” Lotilla said.

Lotilla said the oil-producing Southeast Asian nation may use one of its investment arms in carrying out the plan.

After a period of reorganization in the late 1970s and the acquisition of foreign corporations in the 1980s, Kuwait’s oil industry, supervised by the Ministry of Oil, is controlled today by the Kuwait Petroleum Corp. (KPC) as the overall coordinating body.

KPC also controls a number of subsidiaries, including Kuwait Oil Co. (KOC) which carries out exploration and crude production; Kuwait National Petroleum Co. (KNPC), which manages refineries and domestic marketing; and Kuwait Foreign Petroleum Exploration Co. (KUFPEC) which handles exploration of oil overseas.

Asked when will the proposed investment materialize, Lotilla said the Kuwaiti government “is just awaiting the right timing for its joint venture investments in the downstream sector.”

He said despite the optimism of the Kuwaiti government to expand its exposure in the Philippines, there are some factors that need to be considered.

“The overheating of the market has led to a postponement even of a major refinery project in Kuwait itself,” he said.

KUFPEC, one of the oil investment vehicles of KPC, is currently engaged in a joint venture with Royal Dutch Shell Group in Service Contract 60 off the eastern coast of Palawan and in the Tanon Strait area with Japex, a Japanese exploration company.

KUFPEC is the only company in the Arabian Gulf to carry out drilling, development and production operations in foreign countries. It operates in eight other countries: Australia, China, Egypt, Indonesia, Pakistan, Sudan, Tunisia and Yemen.

Lotilla said Kuwaiti officials also expressed their continuing commitment to these oil exploration projects in the Philippines.

A ministerial roundtable among petroleum and energy ministers from West Asia (Middle East) and East and South Asia was hosted last May 1 and 2 by Saudi Arabia in Riyadh and one of the points of consensus was the encouragement of West Asian investments in the downstream sector in East Asia.

He noted that “the Philippines is ahead in this respect as it is only one of the four countries where West Asia’s major oil producer, Saudi Arabia, through Saudi Arabian Oil Co. (Saudi Aramco) has an investment downstream. The other countries are Japan, Korea and recently China.”

Saudi Aramco owns 40 percent of the country’s largest oil refiner Petron Corp., which is also partly-owned by state-run Philippine National Oil Co. (PNOC).

As member of OPEC or the Organization of Petroleum Exporting Countries, Kuwait owns about 10 percent of the world’s proven oil reserves. Its reserves of 96.5 billion barrels are expected to last more than 100 years.