Founded on 27 January 1980, the Kuwait Petroleum Corporation (KPC) continues to stand as the main oil and gas corporation in Kuwait. In its initial establishment, its main components were acquired through the acquisition of domestic assets. These assets, however, have begun their fusion as early as 1934. The Kuwait Oil Company (KOC), for example, was founded during the early part of the 1940’s [specifically during 1934]. Initially owned by British Petroleum and Gulf Oil, KOC discovered the existence of oil which has commercial value in the market.
Like, the KOC which was founded before KPC’s formation, the Kuwait National Petroleum Company (KNPC) was formed two decades before KPC (specifically during 1960). Partially state owned, by the foundation of the KPC, the KPNC turned into a wholly state owned company and was later on nationalized along with KOC thereby placing it under the control of KPC. After its foundation, the KPC developed two other subsidiaries [besides KOC and KPNC] in the form of the Kuwait Foreign Petroleum Exploration (KUFPEC) and the Kuwait International Petroleum Investment Company (KIPIC).
The role of the later was for the exploration of oil sources outside Kuwait whereas the former opted to invest in oil outside of Kuwait. With these initial existing subsidiaries, KPC was able to gain success during its first decade. From the 1940’s to the 1950’s, KPC was able to upgrade its domestic refineries thereby enabling it to produce high quality products. Combined with the purchase of various assets in Europe [e. g. port, refining, and marketing assets], the KPC was able to stand in equal footing with the major international companies in the oil industry.
In the succeeding years, it was also able to launch its own brand in the form of Q8 in the European countries. According to Marcel & Mitchell (2005) this enabled KPC to secure an outlet for Kuwait’s oil products in the international market (p. 192). This later on continued in India, Pakistan, Thailand, and Singapore. In summary, the developments of the KPC starting from the initial years of its foundation can be traced to the development in the following sectors: (1) refining sector, (2) maritime transportation sector, and (3) marketing sector.
Such developments however were hampered as a result of the Iranian invasion which had a major effect in the development of the KPC. The losses acquired from the invasion, however, were returned by the United Nations Compensation Commission (UNCC) in the amount of $15. 9 billion. Despite of this, the company’s decline continued as a result of both external and internal factors. The effects of the Iranian invasion may be considered as ongoing despite the end of the event in question.
In terms of the internal factors, internal decline characterized KPC in the form of the ‘backward’ development of the agency as it took the form of a government bureau(agency) (Case Study, N. D. , p. 2). This can be seen in the internal feuds within the KPC (Case Study, N. D. , p. 2. ). In line with this, what follows is a discussion of the internal factors which caused KPC’s internal decline. Defining the Problem Regarding the Internal Decline of the KPC
The internal decline of the KPC can be attributed to the following factors: (1) problematic management arrangements within the KPC, (2) lack of specification of the KPC’s relations and function in relation to the Higher Petroleum Council (HPC), and (3) lack of experienced and knowledgeable members in the KPC’s consulting committee for the assessment of the internal arrangements and decisions in relation to the oil industry within the KPC.