Companies Seeking Materials For Oil Contracts Look Elsewhere Due To Uncertainty

MEED magazine reports that contractors working in Kuwait's oil fields are experiencing difficulty acquiring metal and pipeline materials due to persistent difficulties in obtaining these materials from Ukraine, Russia, and China.

An Arabic newspaper reports that according to an industry source, contractors are currently looking to purchase these materials elsewhere, including from India, due to the current situation.

US President Joe Biden's remarks on May 23 suggesting the US would intervene militarily if China attempted to control Taiwan were among the factors affecting prices, according to MEED. The US president's remarks regarding Taiwan, along with other factors, have contributed to the rise in Chinese prices, according to one of the sources.

Kuwaiti contractors buy sheet metal from Shanghai at a lower price as a result of Biden's comments about military intervention, an additional price slap. As tensions escalate, uncertainty increases, and higher prices will result for those wishing to purchase goods from China, the source said.

China's shutdown due to COVID-19 has already caused disruptions in materials shipments to Kuwait from Shanghai. Boosted tensions between the US and China have exacerbated pandemic-related shipment disruptions, according to a second source.

In the case of reliable sources for importing construction materials, Kuwaiti contractors have few options left.

The Kuwait Petroleum Corporation (KPC) advised contractors operating in Kuwait in March to stop using Russian materials for future projects, due to concerns over sanctions and potential supply chain disruptions.

As a result of the Russian invasion of Ukraine, Russian suppliers were banned.

Building material plants in Ukraine halted shipments as the war continued, either due to damage to the facilities or disruption of export routes, or to use them in the production of materials for the war effort.

MEED sources say contractors were forced to import materials from other countries as many companies in Ukraine, Russia and China are not supplying reliable export companies anymore, noting that Indian companies are the most reliable and attractive suppliers at present.

Materials prices from India are uncertain for how long. "The current economic conditions in Kuwait are extremely unstable." It is noteworthy that the oil and gas sector has already been hindered by the implementation of planned projects amid the ongoing political deadlock, along with supply chain issues caused by the measles outbreak.

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