With the significant increase of 22.6%, the draft budget for the new fiscal year revealed an increase in oil production costs to 3.97 billion dinars, bringing the cost of producing one barrel of oil to about 4 dinars ($13.1), despite the expected decrease in the volume of production by 100 thousand barrels daily from 2.7 million to 2.6 million barrels per day.
According to recent statistics, the total cost of oil production in the general budget amounted to about 25 billion dinars during the last ten years, which reveals a significant inflation in production costs during that period, at a rate of about 135%, reports Al-Qabas daily.
This increase in production costs comes at a time when oil prices are suffering from sharp fluctuations in the impact of market developments and geopolitical events, which made the difference between the indicative price (average prices) and the break-even price in the general budget up to about $22 per barrel, knowing that prices The current market ranges between 75 and 80 dollars per barrel.
The increase in the cost of producing Kuwaiti oil, which is the largest resource in the budget, prompted the State Audit Bureau to call for taking the necessary measures to reduce the high cost of producing a barrel in oil extraction reservoirs in the light of the results of studies and committees formed in the oil sector, in order to avoid the reflection of that increase on the cost of producing a barrel.
On the other hand, the oil authorities indicate that the cost of producing a barrel of oil in Kuwait is considered the lowest compared to the surrounding countries and international oil companies, as confirmed by specialized studies in this field, where the cost of producing a barrel of oil is defined as the cost related to the operating operations of producing a barrel of oil.
Examples of this include the costs of operating and repairing wells, salaries of employees, the cost of operating and maintaining production centers, depreciation of capital assets, the cost of contracts and operational materials, in addition to the growth and expansion of exploration and production activities by entering into new areas in terms of types of oil and gas, and the aging of facilities requires Increasing maintenance operations to maintain their safety, in addition to the aging of some reservoirs and the high rate of water production from them.
The Kuwait Petroleum Corporation is taking a number of measures to control the costs of oil and gas production through several initiatives, most notably:
— Adopting different and modern designs for drilling and stimulating wells, in an effort to increase their productivity and reduce the duration and cost of drilling them.
— Developing effective working methods to ensure integration and coordination.
— Improving performance indicators to improve operations and rationalize expenditures.
— Applying modern technology aimed at raising the efficiency of operations and rationalizing expenditures.
The following are the most prominent factors that increase the cost of extracting a barrel of Kuwaiti oil:
The aging of traditional reservoirs requires an increase in operations to maintain their production, such as well maintenance operations.
— An increase in the quantities of produced water, which requires the construction of facilities to deal with it, and the improvement of existing facilities.
— Increased need for water injection projects to maintain pressure on oil reservoirs.
— The increasing need for the application of artificial lift technology, such as the installation of submersible electric pumps in wells with the increase in the quantities of water produced.
The following are the main reasons associated with the development of new, more difficult reservoirs:
— Operation and maintenance of Jurassic gas and light oil production facilities in northern Kuwait.
— Maintenance of deep, difficult Jurassic wells with high temperatures and high pressure.
— The increase in acid gas treatment operations with the increase in the production of Jurassic gas.
— Starting operations to produce heavy oil, which has a high cost.
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