Interview: Sara Akbar, Kuwait Energy's CEO
Kuwait Energy has emerged as one of the few independent oil companies
Kuwait Energy has emerged as one of the region’s few independent oil companies, CEO Sara Akbar looks back on the private company’s rise to regional prominence
It’s not every day that a company can report a near 30% rise in revenue, but Kuwait Energy managed to do it for the fourth quarter of 2012.
The last few months have certainly been a crucial period as Kuwait Energy has continued its rapid growth around the region.
The company won a second bid round for exploration licenses in Afghanistan and also submitted bids for Block I (Sanduqli) and Block IV (Mazar-i-Sharif), two blocks which are located in the Balkh province of Northern Afghanistan at the border with Uzbekistan, in a consortium with Dragon Oil, Turkiye Petrolleri Anonim Ortakligi (TPAO) and Ghazanfar Investment ltd.
Kuwait Energy will take a 30% interest in in the Sanduqli block that will be jointly operated by Dragon Oil. And it will take a 25% interest in the MAzar-I-Sharif block that will be operated by TPAO.
The company has reported that its income for the last three months of 2012 rose from $45.6 million in 2011 to $59 million in 2012. Its production capacity has also followed suit, jumping 16.1% from 15,018 barrels of oil equivalent per day (boepd) to 17,442 boepd for the fourth quarter, year-on-year.
“I am pleased to announce another quarter of year-on-year increases in revenues, profits and production. The quarter also saw us make strategic progress in Afghanistan and extend our access to capital via a new reserve-based lending facility,” says Sara Akbar, chief executive officer of Kuwait Energy.
On December 19, 2012, the company closed a new reserve based lending facility of $165 million with the International Finance Corporation and Deutsche Bank.
The debt facility will be used to finance near-term capital activities and to repay a previous IFC facility.
Kuwait Energy also drew down $50 million of its facility with Abraaj Capital and $33 million with Qatar First investment Bank to finance development and growth plans.
Both agreements are for a $150 million convertible debt facility to be swapped for ordinary shares if Kuwait Energy launches an IPO.
And the company has remained extremely active going into 2013. In January, Kuwait Energy closed its third contract in Iraq to become operator of the block 9 in Basra. The company already operates the Siba gas field, also in Basra and is a partner on the Mansuriya gas field in Dyala province.
“Iraq has important resources, a growing energy industry and ambitious but necessary growth targets to meet,” says Sara Akbar.
“We see an opportunity in new unexplored fields which could help Iraq reach these long-term goals, we’re also poised on grabbing opportunities to explore and develop gas fields that would help Iraq meet its domestic needs and export demand” she adds.
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Of course it wasn’t easy for the private company to enter Iraq. “The main challenge we faced was being a small-sized energy company when we first entered Iraq back in 2006.
We worked closely with the Iraqi government at the time to build a legal study for the service contracts that were signed with oil companies, and also conducted a geophysical study on the Siba gas field,” she remembers.
But things have certainly been looking up for the company since it started working in Iraq. “The step enabled us to prove our expertise and technical expertise, and accompanied with our track record of success in other countries, we were qualified to enter Iraq’s third and fourth bidding rounds for oil and gas field,” says Akbar.
As a Kuwaiti company, one might naturally be led to question the company’s ability to operate in Iraq. But for Akbar, the decision to enter Iraq was also an opportunity to develop the ties between Kuwait and Iraq.
“It was a good way to develop relationships between Kuwait and Iraq, as you know relationships between the two countries have been tense for a very long time and it is simple supply and demand economics,” muses Akbar.
“Iraq has a lot of natural gas and Kuwait needs natural gas,” she says. “This relationship between supply and demand is absolutely crucial and an economic relationship is one of the best types of relationships to have between countries here, developing relationships between Iraq and Kuwait has always been a major focus for us.”
For Akbar, the relationships between Kuwait Energy and the Iraqi government have been supported by two main pillars, both of which are deeply rooted in the values of the partnership.
“The first pillar is to support the country in developing their natural resources for the benefit of their people by bringing our expertise, commitment and dedication,” she says.
“For example, in addition to our exploration and production operations, we are also active in helping with long-term master planning of natural wealth of the countries and their environments as well,” she explains.
“In fact, we are currently working with both the Iraqi and Yemeni governments on this front.”
“The second pillar, and we cannot emphasize this enough, is our focus on helping the communities in our areas of operation. From helping to empower the unusually large population of widowers in Iraq and help clear land mines, to leading environment, small business and healthcare initiatives,” she says.
These two pillars have become the backbone of Kuwait Energy’s operations all over the region. Having expanded into eight countries over the last eight years, the company is consolidating its assets in the Middle East.
“The Middle East is our home and home to the world’s largest reserves, and Kuwait Energy is primarily a Middle-East focused E&P company, so it makes sense for us to focus on the Middle East,” says Akbar.
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“Our current focus of the next two years is Egypt, Yemen and Iraq. We expect that our target to reach an overall production of 75,000 barrels of oil equivalent (boe) per day and proved and probable reserves of 400 million boe by year end 2015 will be mostly led by our investments and activities in these three countries.”
The company is also looking towards entering the Libyan market. “We are currently in the early stages of entering Libya. Let’s not forget that today Libya is in a transition phase focusing on rebuilding not only its energy sector, but also the overall governance system,” explains Akbar.
“One the system is in place, we would look forward to taking part in providing exploration, development and production services.”
In a region where independent oil companies are sparse, it’s rare to see one rise so quickly. But the company has continued to leverage its assets and ride out the storm that has hit the Middle East over the last few years.
“What sets Kuwait Energy apart from its competitors is that we are homegrown and have local knowledge. We know how to deal with the region and all the challenges, especially in a turbulent time like the last few years,” says Akbar.
But the chief executive also welcomes new competition, especially from within the region. “We want to encourage more independent company activity in the region by portraying ourselves as a model for other companies. Here in the Middle East there are very few independent operators, you see the super-majors and the state companies, but there are very few independent ones.”
- 17,442 Average quantity of barrels of oil produced by number of bpd in Q4
- 9.4% Kuwait Energy’s rise in year-on-year Q4 revenue in 2012.
- 75,000 Kuwait Energy’s target boepd level for 2013.