COUNTRY PROFILE: Kuwait

COUNTRY PROFILE: Kuwait

ADVERTORIAL

Hemoco's oil refinery project in Selayar Island
makes significant progress

The development of the Hemoco International Oil Refinery
Project in Selayar Island, South Sulawesi, has entered a crucial
stage.

In January, the management of Hemoco appointed international
financial institution ABN AMRO Bank NV as its financial advisor.
The selection of ABN AMRO Bank was due to the bank's expertise in
advising the oil and gas sector in the region and
internationally. The official appointment was made in Kuwait
City, State of Kuwait, earlier this month.

During the visit by the management to Kuwait City and ABN AMRO
Bank NV, a kick-off meeting was also held between the management
of Hemoco and ABN AMRO Bank NV representatives from Jakarta, the
Middle East and Singapore, the potential supplier of the crude, a
major oil producer in the middle east, and a potential off-take
company with an international reputation from the UK.

Following the results of the advisory work to be carried out
by ABN AMRO Bank, the management will progress to the front
engineering design state and select an Engineering Procurement
Contractor (EPC) before the end of 2003.

The construction, which is expected to commence in 2004, is
expected to be completed by the end of 2007 at the earliest,
commensurate with the plant's initial commercial production.

The signing ceremony for the appointment of ABN AMRO Bank NV
as the financial advisor for Hemoco's Grass Root Oil Refinery
Project in Selayar Island, South Sulawesi, was held at the
Indonesian Embassy in Kuwait on January 16.

Hemoco Selayar International was represented at the signing
ceremony by Dr. Homoud Al Rqobah, Vice Chairman of Hemoco, and
Muchsin Alwy, President and CEO of Hemoco, while ABN AMRO Bank NV
was represented by Eddy Soeparno, Group Vice President for
integrated energy in Indonesia, and Bruce MacFarlane, Senior Vice
President, Project Finance And Structured Debt Asia.

Hemoco was established under the Indonesian Foreign Investment
Scheme in 1996. The initial capacity of the integrated oil
refinery and petrochemical project will be 150,000 barrels per
day (BPD) in the first phase, to be increased to 225,000 barrels
per day. Products will include Middle Distillates (kerosene,
motor, and diesel fuel).

The holding the ceremony signifies the advancing of the
project to the next phase of the development after the
preparatory stage in Kuwait was recently concluded, with the
financial advisor, potential off-taker (buyer) and the crude oil
supplies having been identified.

New Challenge for Indonesia: Attractive investment scheme
required

The Ambassador of the Republic of Indonesia to Kuwait, Hadromi
Nakim, states that "Indonesia must be competitive in attracting
worldwide investors to invest in Indonesia, especially from the
Middle Eastern countries, who have the potential to become the
new emerging investors in Indonesia and to extend regionally into
the rest of Asia.

Indonesia, moreover, must provide attractive incentives for
investors to accelerate the recovery of the Indonesian economy.
Furthermore, he stated that "In this regard, the active role of
the Indonesian Embassy in Kuwait is needed to encourage the
investors to come to Indonesia".

Hemoco is the first of such investment, and it is hoped that
it will be followed by many more small, medium and large
investors from Kuwait. Therefore, Hemoco's success is very
important, as Ambassador Nakim pointed out during the signing
ceremony between Hemoco and ABN AMRO BANK NV as the Financial
Advisor of Hemoco in developing this prestigious project.

With the signing of the contract, he is optimistic that the
relationship between Kuwait and Indonesia at both the
governmental and private sector levels will further expand,
strengthen and deepen.

In essence, this signing represents our collaboration being
put into practice and translates as a potential business coming
to fruition.

Hemoco represents a Kuwaiti strategic interest in Indonesia
and the region.

Dr Homoud Al Rqobah, the Vice Chairman of Hemoco, stated that
"Indonesia with its huge population and rich natural resources
and its strategic location remains one of the most important
Asian countries. It will continue to be promising and a sound
investment destination in the long run".

"We believe that penetrating the Indonesian market at this
moment, of course, requires an extra effort, especially as
regards the mobilizing of funds, but we remain confident that the
equity required can be supplied from Kuwait as well as from
within the Gulf Region. With the growth of demand for refined
products on the back of a rise in economic development in the
region, the Hemoco Oil Refinery Project is considered a sound
investment, especially as Indonesia currently imports refined
products to meet 20 percent of the national shortfall in supply.
Thus, we believe that Hemoco is a strategic investment for
Kuwaitis to secure and increase their oil market share in
Indonesia and regionally. We, as Kuwaitis, need to seriously
consider further strengthening our presence in the fourth biggest
country in the world, population-wise, and the biggest Islamic
Country in the world."

Dr. Mohammed Y. Iqneibi, Executive Vice President of Hemoco,
said that despite the economic and political reforms in Indonesia
and the region during what was regarded as a transitional period
by many, in the long term Indonesia should regain its former
importance. And he hopes "that the Indonesian government will
encourage new investment to help the country emerge from the
economic crisis". He also said that the Kuwaiti investors
remained committed to realizing the Hemoco project in the near
future provided there was warm welcome by making investment
attractive to the private sector and the provision of incentives.

"We are also confident that incentives such as a Tax Holiday,
as suggested by the Ambassador, will be provided by the
Indonesian government," he said.

He added that God willing, Hemoco would continue to press
ahead with the oil refinery project in 2004.

Muchsin Alwy, President and CEO of Hemoco Selayar
International Oil Refinery, the Indonesia partner in the project,
also suggested that an attractive incentive scheme should be made
available and that the government should be more pro active in
encouraging new investors to come to Indonesia.

Cooperation between the government and the business community
had to be improved so that the two sides could help each other in
overcoming the country's economic crisis.

"Hemoco will be moving steadily despite the challenging
situation Indonesia faces at present, but Alhamdulillah (praise
to be to God), the progress we have made to date is as expected
although a great deal of home work still needs to be done. And
hopefully, the situation in Indonesia and the World, which we are
confident will improve in the near future, will be conducive for
building on the already positive progress achieved by Hemoco.