As other Middle Eastern states look to diversify their energy mix, Kuwait appears to be going full throttle on its oil and gas ambitions. The Kuwaiti government has announced aims to become a major OPEC producer by massively boosting production in the coming years. This is supported by large investments in the sector and the expansion of its upstream and downstream sectors. As many other countries embrace a green transition, Kuwait hopes to be a major international player in the oil and gas market so long as demand for the fossil fuels remains.
Kuwait, one of the OPEC’s top producers, plans to increase its oil output to 3.15 million bpd within the next four years, from 2.7 million bpd at present. The Middle East state also hopes to increase its natural gas production by 70 percent over the same period. Kuwait currently follows Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Iran as OPEC’s fifth-largest producer. In recent months, Kuwait has adhered to OPEC+ production cuts, reducing its output by 128,000 bpd. Meanwhile, Iran, which is exempt from the cuts, has increased its crude output, allowing it to surpass Kuwait. Kuwait’s production quota for the next year currently stands at 2.676 million bpd. OPEC’s restriction of oil quotas is aimed at stabilising the market, which has become extremely volatile in recent years.
Despite short-term cuts, Kuwait hopes to significantly boost its oil output over the next decade to meet the ongoing demand for the fossil fuel. This sentiment has been echoed by Saudi Arabia and the UAE, which both intend to increase their output by 1 million bpd each within the next few years. Kuwait has around 100 billion barrels of oil reserves, according to estimates, putting it in a good position to exploit its resources before demand begins to wane in line with a global green transition.
Kuwait’s plan to boost oil and gas production is already gaining traction with the country’s Oil Minister, Saad Al Barrak, announcing a new strategy to increase output through the development of the Durra gas field in partnership with Saudi Arabia. This aligns with the government-backed Kuwait Petroleum Corporation’s (KPC) 2040 strategy. KPC hopes to increase its oil production capacity to as much as 4 million bpd by 2035, with an investment of $410 billion across its operations.
The KPC subsidiary Kuwait Oil Company (KOC) plans to increase oil production to 3.65 million bpd by 2035, which could mean revenues of almost $11 billion over the five years following. KOC is accountable for around 90 percent of Kuwait’s oil production. The company also has big plans for its gas sector, expecting to reach a daily gas production capacity of 1.5 trillion cubic feet by 2040.
KOC has awarded several oil and gas contracts this year, valued at $3.25 billion. Between January and August, KOC awarded 91 projects, according to local media sources. This marks a significant increase in the number of contracts signed in recent years, following the Covid-19-related decline over the last three years. This follows recent successes for KPC, which posted a decade-high net profit of $8.48 billion for the 2023-2023 financial year.
The Durra field, which Iran also claims a stake in, is estimated to have around 20 trillion cubic feet in proven reserves and is expected to be operational by 2029. Al Barrak said the offshore Durra gas field “is considered one of the most important axes of the government's work program”. Kuwait signed an agreement with Saudi Arabia in 2022 to develop the field. In July, Al Barrak stated that the deal gives the two countries exclusive rights in Durra, requesting that Iran validate its claim to the field by demarcating its own maritime borders.
In addition to boosting production levels, Kuwait also has big plans for its downstream sector. It hopes to increase its refining capacity to 1.6 million bpd locally and 425,000 bpd abroad by 2025. The Kuwait Integrated Petroleum Industries Company's (KIPIC) Al Zour refinery complex in the south of the country is expected to come online this month. The company’s CEO, Waleed Al Bader, stated “We will witness the operation of the third refinery in the next few days, so it reaches a maximum capacity of 615,000 barrels a day.”
KPC's international arm Kuwait Petroleum International also expects its full commercial operation of Oman's Duqum refinery to come online by the end of the year. Meanwhile, another subsidiary of KPC, the Kuwait Foreign Petroleum Exploration Company (KUFPEC), said that it is in serious discussions to acquire the biggest gas field in Asia, though it has not provided further details.
A wide variety of new oil and gas projects is expected to help Kuwait become an even bigger OPEC producer over the next decade. The government is investing heavily in the future of its oil and gas industry, as many neighbouring countries invest in the diversification of their energy sectors in line with a global green transition. While many world powers expect global oil and gas demand to eventually wane, Kuwait is betting on the longevity of the industry, reflected in its high production targets for the coming decades.
By Felicity Bradstock for Oilprice.com