Uncertainty pushes oil contracting companies

MEED magazine says the contracting companies operating in the oil field in Kuwait are experiencing difficulties in obtaining metal and pipeline materials, due to the increasing problems related to importing these materials from Ukraine, Russia and China.

The magazine, quoting informed industry sources, revealed due to the current situation, contractors are currently looking elsewhere to purchase these materials including from India, reports a local Arabic daily.

MEED pointed out that among the factors affecting prices were US President Joe Biden’s comments on May 23, when he said that the United States would intervene militarily if China tried to control Taiwan by force. “Along with other factors, the US president’s speech regarding Taiwan has caused prices to rise in China,” one of the sources said.

Biden’s comments about military intervention, an additional price slap, had an immediate effect on the prices that Kuwaiti contractors get to buy sheet metal from Shanghai. “Rising tensions mean increased uncertainty, and that means higher prices on the ground for those seeking shipments from China,” the source added.

During 2022, the shutdown in China due to COVID-19 has already disrupted the shipment of materials from Shanghai Port to Kuwait. Another source said: “Pandemic-related shipment disruptions are continuing, and the problems have been exacerbated by the heightened tensions between the United States and China.”

MEED confirmed that the options left to Kuwaiti contractors are very few when it comes to reliable sources for importing construction materials.

The magazine had reported last March that the Kuwait Petroleum Corporation had asked contractors operating in the country not to use Russian sellers for future projects, amid concerns about sanctions and possible disruption to supply chains.

The ban on the use of Russian suppliers came in the wake of the Russian invasion of Ukraine.

As the war continued, facilities producing construction materials for export in Ukraine increasingly halted shipments, either because they were damaged, or as a result of export routes being disrupted, or to run them in the manufacture of materials for the war effort.

“With many companies in Ukraine, Russia and China now unable to supply reliable export companies, contractors have been forced to look to import materials from other countries,” MEED sources said, noting that at present, companies in India are proving to be the most attractive supplier snd the most reliable.

“It is uncertain how long material prices from India will remain stable. Everything is completely unstable at the moment.” It is worth noting that the oil and gas sector in Kuwait has already been suffering over recent years from the implementation of planned projects amid the ongoing political deadlock, and supply chain problems related to the pandemic.

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