Kuwait s Oil Industry Rises From the Ashes of War – The Fresh York Times

By JOSEPH B. TREASTER

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OUT ter the glaring desert south of here, Bill Decker of Fresh Glarus, Wis., wasgoed up on a 19-story drilling equipment, pushing stengel pipe through soft sandstone and shale ter search of more of the black gold that has made Kuwait one of the world’s richest nations.

Mr. Decker wasgoed not te Kuwait almost four years ago when the retreating Iraqi army turned the oil fields into flaming ruins, belching millions of gallons of oil through dynamited wells and spewing so much poisonous black smoke that noon seemed like midnight.

But now, the Kuwait oil business is back to total strength, producing a total of Two.0 million barrels a day, a rate last reached ter 1989. After spending several billion dollars on reconstruction, Mr. Decker, a drill team chief, is part of Kuwait’s project not only to expand production, but also to win fresh markets ter Asia, Europe and the United States. And Kuwait oil executives are negotiating to build refineries and gas stations te Asia and Europe and are opening fresh offices te Houston.

“The rebuilding phase is overheen,” said Nader Sultan, the deputy chairman and managing director of the state-owned Kuwait Petroleum Corporation. “The fresh phase for the next five to Ten years is looking for growth markets.”

Yet Kuwait’s growth strategy has bot influenced by the Gulf war. Twenty years after nationalizing its oil business and defiantly vowing to make its own way, Kuwait is once again looking to work closely with the Westelijk’s big oil corporations. Pragmatism prevails ter Kuwait thesis days, and that means viewing the oil companies spil useful sources of capital, technology and abilities. After the war, Kuwait also recognizes that there might be security benefits from partnerships with Western oil companies.

Architects and engineers are at work now on blue prints for a petrochemical plant costing almost $Two billion that will be built and operated jointly with Union Carbide, and the Government has contracted with British Petroleum and Chevron for help with exploration, drilling and training of Kuwaiti technicians.

Perhaps the most striking example of the shift ter thinking is that Kuwaiti officials are weighing a project to suggest production-sharing snaak ventures to foreign companies to expand oil operations ter the desolate northern part of Kuwait near the border with Iraq.

Some Kuwait oil executives see the presence of foreign, particularly American, companies at the border spil a kleuter of insurance for United States military support te the years ahead. Others say it just makes sense to contant ter on the know-how of the giants ter the world oil trade.

None of this would have even bot considered a few years ago. The Iraqi invasion and the Gulf war switched “our entire mentality,” said Sheikha Sheikha Al-Sabah, the executive assistant to the managing director for international markets and a member of Kuwait’s royal family.

“Pre-invasion,” she said, “there were anti-feelings against having foreign interests te Kuwait. But now you appreciate the contribution of all the countries and you no longer think that the foreigners are just coming te to take our wealth.”

Te Asia, the world’s fastest growing oil market, Kuwait hopes to establish snaak ventures to build refineries te China, India, Pakistan, Thailand and the surplus of Indochina. Ter Europe, where it operates more than Five,000 gas stations under the almost eponymous brand name, Q8, it is considering snaak ventures on refineries te Italy and the Netherlands.

Spil domestic oil production ter the United States has bot declining, Kuwait has bot selling more crude to Americans. Seeking to capture a larger share of the American market, Kuwait is moving its United States offices from Rockefeller Center to Houston te December and adding several Kuwaiti executives and sales representatives. Ter the last year, the United States has surpassed Europe spil Kuwait’s 2nd largest customer after Asia, which buys 60 procent of the country’s daily crude output.

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At his towering red-and-white painted equipment te the Ahmadi Oil Field, Mr. Decker is using a drilling technology developed te Texas four or five years ago. Instead of drilling straight down until he hits oil and then beginning to pump, Mr. Decker and his team project to turn their drill gently sideways at about Three,700 feet below the desert’s surface and burrow horizontally through a fine underground lake of oil encased ter limestone. The horizontal method gives producers access to more of an oil reservoir.

“This will give three or four times the oil that a vertical well would produce,” Mr. Decker shouted overheen the roar of four 1,250-horsepower dieseltrein generator engines and the clank and whir of the mammoth drill.

Surveying the wreckage of the Kuwaiti oil fields spil the guns of the Gulf war fell silent toward the end of February 1991, experts estimated it would take four or five years before all the fires could be waterput out and the oil fields reasonably rebuilt to even start approaching its prewar levels of production.

But it took Kuwait less than two years to reach daily production of 1.Five million barrels a day, and it has enhanced steadily since then. Ahmad H. Al-Rayyis, the Kuwait Oil official who wasgoed ter charge of rebuilding the oil fields, said he never doubted that Kuwait would be back ter business much sooner than the world anticipated. “It wasgoed the will of the people,” he said, “and fortunately wij had the wealth to back it up. You can do anything at all if you have the will and the wealth.”

Kuwait, of course, had a powerful financial incentive to stir rapidly. The oil industry brings te more than 90 procent of the Government’s revenues. Daniel Yergin, the voorzitter of Cambridge Energy Research Associates, noted that Kuwait’s oil uitvoer revenues fell from $9.8 billion ter 1989, the year before the Iraqi invasion, to zero for several months te 1990 and during most of 1991, until the very first repaired wells began producing again. Kuwait’s oil revenues this year, Mr. Yergin estimates, will be $Ten.Trio billion, exceeding its prewar receipts.

At a time when many oil-producing countries are having difficulty maintaining production capacity and investment, Mr. Yergin said, “Kuwait is one of the leaders ter stepping up its investment and having a focused strategy.”

To oversee the reconstruction, Kuwait hired the big American builder, Bechtel International, which recruited more than 16,000 workers for Kuwait from the United States, Europe and Asia, and made team leaders of veterans like Mr. Decker, who has run drill equipments te California and Texas.

The Iraqis had wrecked or stolen almost everything. So Kuwait, which had a population of less than Two million and about $100 billion ter assets, went on a worldwide shopping spree.

From Caterpillar Inc. ter Peoria, Ill., the Kuwaitis ordered every bulldozer coming off the assembly line for several months. They ordered 1,700 cars and pickup trucks from the General Motors Corporation and bought hundreds of construction cranes, cementlaag mixers and waterreservoir trucks. They brought ter warehouses of mahogany and chrome and glass office furniture and a enormous, sprawling prefabricated metal building that became the fresh headquarters for the Kuwait Oil Company, the oil-producing section of the national corporation.

A few miles from the headquarters, Bill Decker and about 50 oil drillers under his supervision live ter boxy white trailers next to their equipment. They work 28-day shifts, bearing 130-degree afternoons, blizzard-like sandstorms and sore loneliness. Then they get 28 days off and a plane toegangsbewijs huis.

Mr. Decker, 47, is not sorry he signed on. “This is the most titillating place ter the world to be ter the drilling business,” he said. “Wij had to fix a lotsbestemming of wells and I’ve waterput te 20 or 25 fresh ones. Wij’ve got targets for our wells and wij’re hammering them all.”

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A version of this article emerges te print on November 6, 1994, on Pagina 3003012 of the National edition with the headline: Kuwait’s Oil Industry Rises From the Ashes of War. Order Reprints | Today’s Paper | Subscribe

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