KUWAIT, 7 November 2004 — Kuwaiti refiner Kuwait National Petroleum Co. (KNPC) logged a record net profit of up to $760 million for the first half of this fiscal year, thanks to higher oil product prices and lower operating costs.
A top KNPC official told Reuters that if current market conditions continue net earnings for the state-run concern for the full fiscal year ended March 2005 will top $1 billion.
KNPC is in charge of the downstream sector in Kuwait, which controls nearly 10 percent of global oil reserves. KNPC operates three refineries with a total capacity of about 930,000 barrels per day (bpd), a liquefied petroleum gas (LPG) plant and all filling stations in the Gulf Arab state.
The official said the company has already approved results for the five months April through August showing a net profit of $635 million and will in the next two days finalize a September net of either $120 million or $125 million.
This will give KNPC a confirmed profit of either $755 million or $760 million for the first six months of the year, added the official who declined to be named. “These are record profits and they don’t include extra ordinary items,” the official said, confirming a report in Al-Rai Al-Aam daily.
Asked the reason for the profit spike, he told Reuters: “The refining margins have improved as the prices of oil products rose and we lowered our operating costs.” Al-Rai Al-Aam quoted company sources as saying KNPC’s sale of assets such as a lubricants factory for 20.6 million dinars ($70 million) will help it boost its total profits this year.
No comparative figure was available immediately for the year-ago first half, but the latest KNPC first-half profits cruised past the full year 2003 net of $321 million. The refiner had net profits of about $153 million in 2002. “If things continue as now, we expect our profits for this full year to top $1 billion,” the KNPC official told Reuters.
KNPC is treated like any other commercial venture by its parent state-run Kuwait Petroleum Corp. (KPC), which is in overall charge of the oil sector in Kuwait.
“We buy crude oil from KPC at international market prices,” the official said. “If petroleum prices continue to rise that’s not to KNPC’s advantage, it raises our costs.”
OPEC nation Kuwait produces about 2.5 million bpd of crude oil. The country is the world’s largest jet fuel exporter and a leading Gulf supplier of other distillates and fuel oil. It also produces petrol and LPG.
The official said it was still not clear what impact a series of short-lived stoppages at Kuwait’s refineries in recent months would have on KNPC’s financial results later this year. A nationwide power outage on Sunday forced Kuwait to shut its three sprawling refineries — the 460,000-bpd Mina Ahmadi, the 270,000-bpd Mina Abdullah and the 200,000-bpd Shuaiba — and to temporarily halt refined products exports.
KNPC restarted the plants and the exports within a short period. However, Mina Ahmadi had gone into a temporary emergency shutdown on Oct. 10 after a malfunction in steam units, hard on the heels of late September-early October stoppage in which units at the three refineries were brought down after electric current outages. “If there is any impact (on financials), they will show up in the third quarter, the official told Reuters.
