A Merger Is Not Legally Prohibited, But Worker Rights Must Be Protected

In preparation for moving to the second phase of the merger and restructuring, Kuwait Oil Company and Kuwait National Petroleum Company have conducted diligence on the merger of Kuwait Gulf Oil Company (KGOC) and Kuwait Integrated Petroleum Industries Company (KIPIC), finding no legal obstacles to the merger; however, it is unclear what may happen about the merger mechanism and how that might affect employees or certain contractors.

High-ranking sources told a local Arabic newspaper that the teams in each company have completed the required report in the merger of KGOC and KIPIC.

Sources stated that despite the controversy surrounding the effects of restructuring the oil sector and its potential impact on a large number of stakeholders, including the possibility of terminating some contracts and affecting the job titles of some workers, there is a directive to conduct studies prior to any executive decision so that workers' rights are protected.

However, sources reported that challenges will arise due to this merger, including the ongoing controversy surrounding job titles and how they will affect job opportunities and promotions, as well as the legal status of the oil unions at these companies and how it will affect their status.

In addition, the sources reported that some contractors may file compensation claims in the event their contracts are terminated, including contracts with KOC that have similar terms with other contractors in KGOC, and in the case of mergers and restructurings, this may impact contracts of some contractors and may affect their relationships, despite KOC's legal rights to terminate these contracts.

There was confirmation that the completion of a diligence examination is just the first step, followed by later stages that would be examined to ensure that workers in the oil sector would not suffer damages before any executive decision was taken.

Sheikh Nawaf Saud Al-Sabah, CEO of Kuwait Petroleum Corporation, has stated that safeguarding the legal rights of workers is of the utmost importance, especially because the next stage in Kuwait's oil industry calls for concerted and integrated efforts.

Al-Saud's directives make clear that all files must be reviewed before moving to implementation, especially the vital files, and that these files must be reviewed in a realistic and accurate manner while studying current and future variables that may affect employees, functional structures and all parties affected before the merger can be completed.

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