KUWAIT - The US Market.

The US oil market is of strategic importance to Kuwait, a point stressed repeatedly by succeeding Kuwaiti oil ministers. A major part of Kuwait's crude oil exports moves to the US market and KPC wants to see the volume increase in the coming years. This is mainly because of Kuwait's virtually total dependence on American protection against external attack. But KPC has shied away from advice to buy into existing oil refining assets in the US, where no grassroots refinery has been built since 1976, because they have become too expensive.

In early 1991 the US led an international military alliance to liberate Kuwait after Iraqi occupation from Aug. 2, 1990. On March 20, 2003, the US led another military alliance - this time called "coalition of the willing" - in a war which brought about the collapse of Saddam Hussein's murderous Baathist regime in Iraq. The first war was led by President George Bush Sr. The second, launched from Kuwait, was led by President George Bush Jr. Now Kuwait feels far more secure, though the US in Iraq now faces continuous chaos and armed attacks from Saddam loyalists and Salafi terrorists linked to Osama Bin Ladden's Qaeda network.

There are no encouraging opportunities left for KPC in America, as the US oil market has been controlled by super-majors resulting mainly from mega-mergers and strategic alliances among the companies. One possibility, though still remote, could be an acquisition by KPC of Venezuela's assets in the US market held by state-owned Petroleos de Venezuela (PDVSA). The assets include more than 1m b/d of oil refining capacity in the most important parts of the US market and are run by PDVSA's US affiliate Citgo. On a number of occasions before and after his election to the presidency in late 1998, current ruler Hugo Chavez (a strange Marxist) has indicated that he would get PDVSA to sell its overseas assets including those in the US.

The European Market: Most of KPC's west of Suez operations are located in Europe, where KPI has a network of almost 5,000 service stations rationalised and improved in recent years, compared to almost 7,500 stations in 2000. These give KPI a 6.8% share of the West European market: 24% in Denmark, 17% in Belgium, 12% in Sweden, over 11% in Italy, and 4.5% in the Netherlands. KPI has 50% in a 300,000 b/d refinery in Italy, plus two closed oil refineries one in Italy and another in Denmark converted into storage facilities, a 75,000 b/d revamped and upgraded refinery at Rotterdam, and seven lubricants plants.

West Europe provides an outlet for a big part of Kuwaiti oil exports, with KPI's network 400,000 b/d of its Q8 brand of gasoline and other products. KPC's is to raise KPI's European retail network to 500,000 b/d and a wholly Kuwaiti-owned refining capacity of 300,000 b/d, from 225,000 b/d at present.

It was in 1986 that KPI introduced the Q8 logo for its service stations and oil products marketed in Europe. KPI became one of the 31 founding members of the European Petroleum Industry Association (EPIA), established in September 1989. Its lubricants business is important, supplied by KPI's lubricants plants - with two in Rotterdam, and one in each of Antwerp (Belgium), Milan (Italy), Redmoelen (Sweden), Gulfhaven (Denmark) and Leeds (Britain).

KPI has an International Diesel Service (IDS) which operates a network of over 280 truck-servicing units on Europe's motorways. Kuwait Petroleum France, set up in 1988, opened its 10th truck centre in September 1992.

In March 1983 KPI bought Gulf Oil Corp's refining and retail interests in Sweden and Denmark. This included the 60,000 b/d Gulfhaven refinery in Denmark, two lube oil blending plants, storage facilities for up to 6m barrels of crude oil and refined products, eight terminals and a 50% interest in 30 terminals in Sweden.

(A partnership of BP and Gulf Oil had the main oil concession in Kuwait, with its KOC accounting for the bulk of oil production in the emirate, until it was nationalised in late 1975).

In August 1985 KPI bought 53 of the 350 service stations in Belgium from Elf Aquitaine. The deal brought the total of KPI stations in Belgium to 400, and some of them were enlarged. KPI added 25 more stations to its network in Luxembourg in late 1983, purchasing them from BP. That raised the number of KPI outlets in Luxembourg to 57, making it the largest oil distributor there.

Later KPI scrapped a number of old retail outlets in West Europe. It modernised the port facilities of the 75,000 b/d Europoort refinery near Rotterdam at $46m. New units were installed to increase the plant's gasoline output by 11,000 b/d to help KPI meet a growing demand for high-octane and lead-free gasoline. They included a 6,200 b/d Penex/Molex recycle isomerisation unit, a 30,000 b/d naphtha hydrotreating unit and a 20,000 b/d continuous catalyst regeneration (CCR) platforming unit. The work was completed in mid-1990.

KPI is having the plant upgraded further to meet EU diesel specifications due in later 2005. Foster Wheeler Italiana has revamped a vacuum facility and the hydro-desulphurisation units in a project completed in October 2004. In recent years, KPI has considered a further upgrade and expansion of this refinery to 150,000 b/d.

KPI expanded its Danish operations in April 1987 through the purchase of most of the interests of BP's subsidiary in Denmark, BP Olie Kompaniet A/S (BP OK). The deal brought KPI an additional 389 filling stations together with a nationwide home-heating, boiler and burner service company, a company distributing motor spares and a wholesaler supplying goods to service stations. But the refinery in Denmark was shut down in April 1997 and the site now is being used as a terminal and storage facility.