We recently discussed the use of nanotechnology in oil and gas, as well as other industries in a recent panel session at the First Kuwait Small to Medium Oil Industries Conference. Hosted by Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Jaber Al-Sabah, the Minister of Oil, Minister of Information, and the Chairman of the Kuwaiti Petroleum Corporation, the conference intended to not only expand the role of small and medium-sized businesses in Kuwait’s oil industry, but in other industries as well.
By fostering entrepreneurship and development of new technology, Kuwait hopes to diversify its oil-dependent economy by exploring new markets driven by science and technology, and by reducing reliance on a few large organizations in favor of a more balanced ecosystem comprised of businesses of all sizes. To help advance these goals, the Sheikh announced an $87 billion program.
The audience itself posed challenging questions to many of the local speakers, revealing that there is an undercurrent of frustration with the centralization of power in the economy – the same centralization that the Sheikh’s program would address with funds for smaller businesses. Regarding the vision of a new, technologically-powered economy, one woman asked, ”Where is the strategy? Where are the leaders?” Another demanded to know “Whatever happened to privatization?”
In one particularly heated exchange, a financier asked a representative of Kuwait’s PIC Corporation, ”Why are you (PIC) subsidizing Dow Chemicals with cheap feedstock instead of using local companies and supporting our private sector?” The PIC manager replied, “If you can show me one local company, anywhere in the Gulf, that has run hundreds of polyethylene plants and who invented the technology, I will work with them. But there are none.”
The growing momentum behind opening and diversifying the economy was striking – and it poses opportunities and threats for the downstream petrochemical industry in particular. For example, as petrochemical giants like Dow and BASF try to maintain their hold on downstream processing and refining, they would do well to contemplate what happened to international oil companies (IOCs) like ExxonMobil and BP who had invested expertise and capital to pursue upstream exploration and production. Then, as national oil companies (NOCs) developed their own R&D expertise, they were able to increase pressure on and ultimately oust the IOCs, keeping the lion’s share of oil revenue to themselves.
Societal pressure is now on to repeat the performance in downstream industries, and retain more of the value of end products like polyethylene as well. While this transition will take years to unfold, it will not take decades: clients should pay close attention to Kuwait, Qatar, and other Gulf states that are rapidly evolving their economies using advanced nano-, bio-, water, power, and solar technologies as their roadmap.
