Equate’s President & CEO Mohammad Husain talks to Jyotsna Ravishankar about the need to succeed not just as a company, but also as a country
When one looks at the percentage contribution of Kuwait to the overall petrochemical capacity in 2012, the official Gulf Petrochemicals and Chemical Association (GPCA) figure says only six per cent of the entire GCC capacity comes from Kuwait.
However, industry veterans like Mohammad Husain, CEO, Equate are eager to grow this figure and make Kuwait a more prominent petrochemical producer globally. Equate is a company that is going from strength to strength since its start-up in 1997. Today the company has achieved total net profits exceeding $6 billion.
Its success, according to the company, has been largely driven by innovation, strong ties with clients, shareholder commitment, operational excellence and most important of all, its highly competent human resources.
Refining and Petrochemicals Middle East caught up with Husain to congratulate him on the record profits and also to find out more about the ‘Equate 2020 strategy’ that he unveiled recently.
To ask a CEO the success formula of his company is akin to asking a chef the recipe of his favourite dish – it is often tricky to get the right ingredients honestly spelled out. But Husain is not a man who hides behind jargon.
The Kuwaiti CEO says it is important for companies to first have a good relationship with existing clients instead of continuously following trends like ‘increasing the client base’.
“One of the main of elements of Equate’s success has always been its customer focus through having strong bonds with all clients within and outside of Kuwait,” he says.
“For example, throughout 1998 to 2011, the volume of Equate’s local sales has increased from 11,000 metric tonnes annually (MTA) to over 40,000 MTA in 2011 with a value of over $30 million.
Thus, it is not about making deals with new customers for the sake of having a bigger list of clients; however, it is more relevant to creating mutual added-value to relationships at all levels,” he says.
But that is not to say the Kuwaiti company has not grown. Geographically, Equate’s presence is evident throughout the Middle East, Europe, Asia and parts of Africa.
In 2012, the company rise in profit reflected a strong global demand for petrochemicals that pushed the company’s sales to a record $2.6 billion. On the back of declaring the profits, Husain also announced a 2020 strategy for the company.
Through the “Equate 2020 Strategy,” the company is implementing a thorough and comprehensive plan that consists of three main stages. The first stage focuses on building capabilities for future growth, while the second stage concentrates on developing capacity for global operations and the third stage is intended to position Equate as one of the top global leaders in petrochemicals.
“So with this plan, the main emphasis is on maximising the value of existing facilities,
capitalise on the operational excellence of the organisation and narrow the gap for any skills or capabilities required to operate in the global arena.” he says.
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The strategy is not unilateral, Husain says, as the purpose is not just for Equate’s growth but also for the growth of the Kuwaiti petrochemical sector as a whole.
“The growth of the country’s petrochemical sector is possible, through enhancing various production outputs by expanding locally or seizing fruitful acquisition opportunities outside of Kuwait,” he says.
Kuwait’s petrochemical sector does not enjoy the autonomy of its Saudi Arabian counterparts. However, Husain says while that is a problem in Kuwait, there is a larger Gulf challenge that the petrochemical industry needs to address.
While there is wide-spread consensus about the need to diversify the conversion industries, the Gulf is still quite ‘basic’ in its petrochemical portfolio, he says.
“Currently, most downstream industries in Kuwait and the entire Gulf are somewhat basic and not that sizable due to these countries being mainly exporters of basic petrochemical products and importers from major industrial nations.
Having an ambitious and productive downstream industry requires having a suitable market to consume the output or ensuring that these exports will find sustainable markets,” he says. So the next obvious question is, are the governments truly supporting the conversion industries and helping petrochemical producers move down the value chain?
“Cooperation and coordination between government authorities, as well as public and private industrial organisations are vital matters that need to be looked at across Gulf countries.
Gulf companies ideally should get the overall support that western petrochemical companies receive from the countries they operate within, along with the facilitations provided by their respective governments that include loans, as well as having the right infrastructure. The current situation in the Gulf cannot be considered as an ideal setting,” he says.
This industry sector specifically does not only depend on cooperation and coordination, but also on developing production capabilities, the efficiency of operations, the strength of its administrative team, having a comprehensive model especially in human resources to ensure having the right skills and experience to develop this sector sustainably.
So Husain says if the plastic conversion industry has been positioned within the overall country’s economic plans with a clear focus on exporting, it is then that we should expect growth in that industry with further opportunities.
Part of the government’s support that petrochemical companies also look for is sufficient feedstock allocation. With utilities and petrochemical projects fighting for gas allocation, large projects are eyed with a bit of concern by industry insiders.
“In light of growing demand and consumption of electrical power, there must be sufficient collaboration to ensure that such increasing energy needs do not hinder the petrochemical industry,” Husain says.
Having additional ethane allocated depends on a number of factors ranging from the most economically viable project to, if the country actually has any additional gas reserves allocated. But Husain strongly recommends a third ethane cracker in Kuwait.
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The benefits of the cracker, according to him, outweigh any possible challenges posed by the new facility.
“A third cracker will have several added-value returns including new job opportunities, over 20% increase in procurement worth $185 million of which a good percentage can be done through local companies; not to mention an increase in the annual production of polyethylene and ethylene glycol.
“These added-values can be created if we dedicate more ethane to the petrochemical industry,” he asserts. So will Equate look at importing feedstock for its plants?
“Well that is part of the overall strategic view; however, there are challenges in imports in terms of necessary infrastructure currently,” he answers.
Finally you need to understand that Equate is not merely a petrochemical producer, he says, it is an active member of Kuwaiti society and a global player that contributes positively to the emerging petrochemical sector.
Equate is an international joint venture between Petrochemical Industries Company, The Dow Chemical Company, Boubyan Petrochemical Company and Qurain Petrochemical Industries Company.
Being the first international petrochemical joint-venture in Kuwait and the Gulf is one element that drives Equate’s dedication to setting an example on corporate sustainability, explains Husain.
“We work very hard at Equate to create a culture of teamwork, to continuously develop our employees, to have constructive innovation, improve overall excellence, build strong relations with all stakeholders, and to be a valuable member of the community to embody the ‘Partners in Success’ tagline,” Husain concludes with his trademark smile.
Environment First
Kuwait’s first Plant Water Recycle Project stems from Equate’s continuous aspiration to achieve environmental, health and safety excellence, as well as preserve natural resources, decrease water consumption and creating added-value for utilised water.
Launched with Aquatech, the project is part of a comprehensive environmental programme by Equate valued at over $ 11 million located within Equate’s petrochemical complex in Kuwait. In addition, Equate established Kuwait’s first seawater cooling towers as part of this holistic environmental programme.
CO2 recovery project
Kuwait’s first CO2 recovery project was launched in cooperation with Kuwait’s Greencarbon Company, a subsidiary of Alnafisi International whereby Equate will annually supply an estimated 150,000 tonnes of CO2 from one of its facilities.
In numbers:
- 40,000 MTA is the volume of sales Equate achieved in 2011
- $2.6bln Is a record sales figure the company managed to hit in 2012
