KUWAIT - Part 1 - Overview, The Geology & Exploration.

With the help of multinationals, Kuwait is to raise its sustainable oil production capacity to 4m b/d by 2020. Production of associated gas will rise to more than 1,500 MCF/d by 2020. Kuwait Oil Co. (KOC), the local upstream arm of state-owned Kuwait Petroleum Corp. (KPC), is concentrating on development of oilfields rich in natural gas.

Kuwait's energy consumption has more than doubled in two decades to reach 23m tons per annum of oil equivalent in 2004, from 9.9m t/yoe in 1993 (see Downstream Trends). Kuwait wants to accelerate its shift from oil to natural gas, but it is acutely short of this source of energy and is eager to import natural gas by pipeline from neighbouring countries (see oil exports and gas trade in Part 3).

Kuwaiti Energy Minister Shaikh Ahmad Al-Fahd Al-Ahmad Al-Sabah on May 2 said his country's oil production capacity had reached 2.7m b/d. With world demand for oil being strong, Kuwait's actual output now is close to this capacity. New capacity was made ready after the reopening of gas-boosting station in the northern Rawdhatain oilfield near the border with Iraq, which was destroyed by an explosion and fire in January 2002 (see Part 2).

A parliamentary subcommittee is expected in May or June to release recommendations on Kuwait's long-stalled proposal to open up its northern oilfields to western oil majors. Farouq Al-Zanki, chairman and CEO of KOC expects the subcommittee to propose changes to "Project Kuwait", but he cannot say what they would be and remains confident the project would win approval. This is what KPC executives and government decision decision makers have been saying for years (see who's who in Part 5 in OMT No. 25).

KPC is having a new 600,000 b/d refinery to boost capacity to about 1.6m b/d. Work on the new refinery, the fourth in the emirate, is scheduled to start in 2007 and production will begin in early 2010 (see DT No. 22).

Kuwait is increasing its investment in overseas E&P ventures, with KPC having become a trans-national player (see Part 4 in OMT No. 24). KPC has teamed up with Shell and BP in seeking overseas investment opportunities and has begun looking for a stake in a Japanese oil refining operation (see DT No. 24).

KOC has made interesting gas discoveries at two northern oilfields. Since 2000, it has found major reserves of high quality oil rich in gas. Having "strategic alliances" with multinationals since 1992 to provide it with technology, KOC has service contracts with BP, ChevronTexaco, ExxonMobil, Shell and Total. An improved service arrangement for 20-25 years, including incentives to cut costs, is being offered to the multinationals (see Gas Market Trends of this week).

The emirate has gone a long way since its recovery from Iraq's occupation from August 1990 to late February 1991. Kuwait's energy sector is functioning well and the economy has been strong thanks to high oil prices since April 1999. Kuwait has more than 36,500 millionaires with a wealth of about $100 bn (see Downstream Trends of this week).

Kuwait has a booming petrochemical sector. An olefin venture is making good profit, and this is being expanded. It is having an aromatics complex (see DT 23).