No intent to reduce oil production
Kuwait will neither reduce oil production nor intervene in controlling prices, Acting Oil minister and Minister of Finance Anas Al Saleh told journalists at the sidelines of the Petroleum Economist Kuwait Energy Strategy Forum held last week.
Oil prices have been on a free-fall since mid-2014, dropping below $30 dollars a barrel and creating huge deficits for oil exporting nations. Kuwait’s oil revenue dropped by 45 percent in the first 11 months of 2015, with Brent crude prices falling 22 percent in the same period.
Oversupply of oil has led to calls by both OPEC and non-OPEC members to cut production so that prices may not slide further. Commenting on this the minister said “I don’t see logic in OPEC cutting production while non-OPEC members do not,” adding that Kuwait was against controlling prices in any unethical way.
Regarding meeting of OPEC and non-OPEC producers Al Saleh said without an agenda there was no point in meeting for meeting sake and he did not see any dramatic changes in prices as a result. “We will continue working as per our strategy for 2020 and 2030, and continue with heavy investment in the oil sector and improve our efficiency and boost production as per our plans.”
Al Saleh said efficient producers will prevail in the end as in the past OPEC has always stepped in and stabilized markets by fulfilling shortages due to any reason. Kuwait will work towards improving efficiency in its oil sector and to maximize production, he said adding that the policies taken in the last OPEC meeting were doing well.
On the bright side of the oil price decline, Al Saleh said it was the right time to start structural reforms and ensure sustainability. He added that the parliament would discuss studies prepared by the government on how to "ration spending" at a meeting on 9 February, but gave no further details.
Kuwait's parliament last July approved a state budget for the current fiscal year, which runs to end-March 2016, envisaging a deficit of KD8.18 billion — nearly half of total spending —because of low oil prices.
The budget for the year that began on 1 April, 2015, featured spending of KD19.17 billion and revenues of KD12.2 billion dinars, on the basis of an average oil price of $45 a barrel during the year.
Asked if a $25 a barrel would be the price for oil in the 2016-17 budget, Saleh told journalists: "Around this figure."
By Reaven D’Souza