Kuwait Oil Pilot Project Opportunities
The state-backed Kuwait Oil Company (KOC) is the largest company in the oil sector by revenue and is responsible for oil production. Kuwait’s oil revenues for the fiscal year 2023 grew to $87 billion, accounting for around 95% of Kuwait’s exports.
As part of its strategic plan to increase oil production to four million barrels per day, Kuwait Oil Company’s Research and Technology (R&T) department receives proposals for new technology from international companies. This is a major opportunity for the U.S. energy firms.
The Kuwait Oil Company has a “no cure-no pay” policy in which pilot projects to trial new technology will only be reimbursed if they meet agreed-on benchmarks for performance. A. An example of a benchmark goal could be oil recovered from a new technology that reduces oil spillage or tubing must remain function for a certain number of days. The benefit is that once the technology has met the benchmarks, it will likely be adopted throughout KOC.
Having a local partner is crucial for success as regular follow-up is needed with several departments inside KOC. The adoption process can take 1-3 years from proposal to project launch to evaluation.
Below are the steps for proposing a technology pilot project to the Kuwait Oil Company:
Step 1- Identify Local Agent and Determine Technology Needs
A. An international firm should find a suitable local agent to help them walk through the process and to better understand the current technology needs for KOC. Local firms are already working with the various departments at KOC and have an understanding of their challenges. An engineer within a regional or functional department must be on board with a proposal for the Research and Technology Department to approve it.
Step 2 – Submit Proposal
A. A technology proposal should be submitted here: https://mcstrc.kockw.com/Eproposal/.
B. Note: this link only works within Kuwait and thus a local partner will need to do the submission.
C. At this stage, the firms should be engaging the R&T team as well as the asset managers within KOC to push for their project. A response can take up to six months.
Step 3- Technical Session
A. If the proposal is approved, KOC will send an approval fax as well as an invitation for a virtual technical session. Often dozens of managers from various departments within KOC are invited for the session and the international firm should prepare well to give a strong technical presentation as well as to answer any questions.
Step 4 - Evaluation
A. The technical department managers will discuss the proposal after the technical session and decide whether to move forward. The local and international firms should engage regularly with the R&T and technical departments at KOC to answer any questions and push for the project. The projects will not move forward without direct engagement.
B. If the technical managers approve the project, they will notify the R&T department. R&T will request a candidate well be designated for the trial. The technical managers then need to notify the R&T department if they approve the well. Then discussions over pricing will commence.
Step 5- Pricing and Contract Negotiation
A. Prepare and Submit Commercial Proposal to R&T: Pricing negotiations should begin before a formal proposal is submitted. This involves engaging with engineers from the R&T and technical departments within KOC. Once all parties, sign off, a formal submission can be submitted.
B. Contract Model Chosen: R&T will work with the proposal submitted firm to discuss a contractual model. The preferred model is to add the pilot project onto an existing large contract which is quick and requires fewer approvals. If no contract exists in which the project can be placed, a new contract will need to be drafted which can take as long as a year.
Step 6 – Field Trial Designed
A. Once the pricing is agreed on, the R&T department will create a Project Opening Form, which guarantees that the pilot project will take place. Once the form is signed, a task force will be created among various KOC departments. A technical session will be held with the proposing firms to finalize the success benchmarks of the project.
B. R&T to create a Task force team: Once the POF is signed, R&T will create a Task force team, including representatives from the concerned Assets and will invite the company for an MS Teams technical call to reconfirm the success criteria.
Step 7 – Field Trial Execution and Evaluation
A. Once the contract is executed and the success criteria are agreed on, the proposing firm will execute the project which typically lasts about 12 months.
B. If the project successfully meets its benchmarks, the task force will approve the project and the contract will be paid.
C. This technology will be approved for use throughout the Kuwait Oil Company.
For any questions or support on the Kuwait Oil Company’s Pilot Projects process, please email Yousif Almahdi, Commercial Specialist, Energy Sector at yousif.almahdi@trade.gov