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Kuwait to spend billions to boost oil production
February 10, 2018, 3:12 pm
Kuwait Oil Minister and Minister of Electricity and Water Bakheet Al-Rashidi

Ongoing commitment to curb oil production as part of OPEC-mandated production cuts has not stopped Kuwait from going ahead with plans to spend billions of dollars on enhancing existing oil production and developing new facilities.

Outlining ambitious growth plans for the country’s oil sector, Kuwait Petroleum Corporation (KPC), the parent body responsible for Kuwait’s upstream and downstream hydrocarbon activities, said it planned to spend US$500 billion over the coming years to boost its current crude oil production capacity by 70 percent to 4.75 million barrels per day (bpd) by 2040.

Speaking recently at an oil-industry conference, the CEO of KPC Nizar Al-Adwani said, "KPC is expected to spend $114 billion in capex over the next five years and an additional $394 billion beyond that to 2040." Kuwait current oil production capacity is around 3.15 million bpd.

The planned expansion signals a determination by Kuwait to enhance its market share in the face of growing competition regionally and internationally, from both OPEC and non-OPEC members, including Russia and the new emerging oil superpower, the United States.

On completion of its oil-sector expansion programs, Kuwait’s production would exceed the output of OPEC’s second and third biggest oil producers, Iraq and Iran, which currently produce around 4.4 million and 3.8 million bpd respectively.

Adsani also revealed at the oil conference that as part of efforts to reduce emission of harmful gases into the environment, KPC’s future power plants would be gas-powered, and that the company would also look at renewable energy sources if it made commercial sense. He noted that non-associated natural gas production in Kuwait is set to increase to 2.5 billion cubic feet per day (cfd) by 2040, from the 0.5 billion cfd expected in April 2018 and 1 billion cfd by 2023, Adsani said.

Meanwhile, speaking at a media interview last week, Kuwait's Oil Minister and Minister of Electricity and Water Bakheet Al-Rashidi said that the country’s volume of crude oil exports is currently 2.1 million bpd and that current oil production stood at around 2.79 million bpd. He added that in conforming to the production cuts agreed by the Organization of Petroleum Exporting Countries (OPEC) and several non-OPEC members, Kuwait had reduced its crude production by over 180,000 barrels per day from its peak of 2.97 million barrels per day in January 2017.

Pointing out that the production-cut agreement had contributed in the efforts to restore balance between demand and supply in the oil market, the minister added that the commitment by OPEC and non-OPEC members had resulted in a positive impact on oil prices, which have shown an increase in recent months. He expressed hope that the recent decision to extend the production cuts to the end of 2018 would further help align the market.

With regard to the impact of US shale oil on global crude prices, the minister said that increased oil production in the United States had led to an imbalance in the market and consequently a weakness in oil prices in recent years. He admitted that US shale oil production is expected to increase in volume in the coming months.

The oil minister went on to note that oil prices are affected by a combination of factors, most notably global growth, which has fueled a recovery in demand, as well as geopolitical and technical developments, which affect production of some countries. Minister Al-Rashidi stressed that regardless of fluctuating oil prices, Kuwait oil sector would continue with its strategic long-term plans and its diversified projects covering all oil fields.

Elaborating on KPC's new strategic plan to increase oil production to 4.75 million barrels per day by 2040, Minister Al-Rashidi said KPC aims to translate its strategic directions into a roadmap to ensure its achievement and supports Kuwait's domestic and international role as a reliable source of global energy security.

Pointing to the need to continue investing in exploration and development of production, including the development of heavy and light oil production, the minister said they were needed to achieve the goals set to raise Kuwait’s crude oil production capacity. He also disclosed that the Al-Zour refinery project will be completed in 2019, “as nearly 45 percent has so far been achieved”.

Reiterating that achieving oil production goals were important, Minister Al-Rashidi added that the oil sector was committed to pursuing its targets while protecting the environment. He pointed out that the KPC’s environmental fuel project aims to produce environmentally-clean products that were in line with global standards and which meet demand patterns, while at the same time ensuring that we “maintain our markets and secure new markets”.

He pointed out that the strategy of KPC is based on the “principle of complementarity between the various activities carried out by the oil and gas industry in Kuwait, which starts from production and ends at the delivery to customers, a strategy that ensures protection against fluctuations in oil prices and maximizes the added value of Kuwaiti crude oil”.

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