Since 2001, Bader Al-Khashti has been the chairman and managing director of KUFPEC. Before that he worked in the operations division of the Kuwait Oil Company. A mechanical engineer, he helped lead the team that extinguished the oil-well fires after the liberation of Kuwait in 1991. He talked to ET’s managing editor, Robert Bryce, this past June at his office in Kuwait City.

ET: What does Kuwait gain by having an international oil company?

BA: [KUFPEC] initially had four objectives. First of all, it was a chance for Kuwait to gain technology by interaction with international oil companies, [to] work with them [in the] outside [world], and to bring that technology to Kuwaiti oil fields. Second, … whatever [KUFPEC] produces, it would have production that was outside the OPEC quota. Third, Kuwaiti engineers were only working in Kuwaiti fields. [The] idea was to have engineers working in the outside world, internationally – there is knowledge to be gained from there. So there was a venue for expertise where Kuwaitis could be utilized internationally. Fourth, it’s [a] profitable business.

ET: KUFPEC operates in 13 countries. But you have more projects in Australia than anywhere else. Why?

BA: The Northwest Shelf of Australia became a focus because of the production level that we are gaining. We have been there since 1984 or ‘85. Over that time we have gained a lot of good experience with our operators there. The cost of drilling wells is cheaper because it is shallow water. The second thing is, the reservoirs that you discover, they can be integrated together. [You can] have small reservoirs that are not economic, but if you find a lot of them, you can produce them all together.

ET: Is Australia a focus because of its proximity to China?

BA: Not really. The system in Australia was very helpful. The tax system is favorable, it’s clear-cut, and the government doesn’t interfere with any of your activities. Of course, there are rules for your operations, particularly for the environmental part. That’s part of the operation you carry on. But it’s a very clean system. And we like it.

BA: In China there’s little to be discovered. In India, there is a lot of potential. They have about 50 blocks that they are offering [for bid]. There are good chances there. And we are interested because of the historic relations between India and Kuwait. Ever since Kuwait has existed, it’s had close ties to India. At the same time, looking at India and doing some E&P business, it wasn’t easy to enter. For some time, India was limited only to the national oil companies and not the international oil companies. But I think that view has changed.

As for China, we’ve been in the China Sea [in the Yacheng block], producing some gas with our partners and delivering gas to Hong Kong. And we have a Chinese partner, they are the operator, which is CNOOC. For exploration within China, we haven’t had much success. We’ve tried it, but it’s more of a Chinese operatorship, rather than anybody else. So they have four or five Chinese companies and the good fields have already been taken.

The major focus that we have now is Africa. The west coast [of] Africa, especially. I call it the last resource of energy that is available. You have a lot of international activity in Algeria, Mauritania, Ivory Coast, Gabon. There’s a lot of potential. So we are focusing on those.

BA: I don’t want to be there. The reason is the instability. We see the majors having trouble there. If we went in there it would be with a very low profile.

ET: And what about Russia?

BA: There is a lot of potential for better reservoir management. This is where we see opportunity. If we get in there, that’s our strength – that we can manage the reservoir better and enhance the production. But it’s not easy to go into Russia. The minute you enter Russia, it’s like entering a dark room with a small match in your hand, trying to find your way. But we are trying. We are taking another approach – by having Russian partners, because they can lead you.