Kuwait Petroleum Corporation (KPC) has set itself some ambitious upstream targets. Its chief executive, Nizar al-Adsani, told the Petroleum Economist annual Strategy Forum in Kuwait City last week that KPC had “launched its 2040 strategy which focuses on growth in oil activities that require significant capital to finance the mega-projects”.
He went to say that KPC is on course to raise crude oil production capacity to 4.75m b/d by 2040—up from the current level of around 3.1m b/d. Adsani stressed that the goal was achievable. “I wish to assure you,” he continued “that Kuwait Oil Company [a KPC subsidiary] will deliver on this strategic production target. All projects are at the implementation stage or in the process of being commissioned, according to plan.”
It’s not clear whether the 4.75m b/d target includes Kuwait’s 250,000-b/d half-share of production from the Neutral Zone. A dispute between Saudi Arabia and Kuwait resulted in joint operations in the zone stopping in 2015. While on a number of occasions there have been suggestions that the issue was close to being resolved, production remains shut in. Adsani made no reference to the Neutral Zone in his speech.
As for the “significant capital” required to finance the planned oil production capacity expansion, Adsani said “KPC is expected to spend $114bn in capex over the next five years, and an additional $394bn beyond that to 2040.”
Natural gas output is also set to rise, the KPC chief executive told the conference. “Sustainable non-associated gas production will increase to 2.5bn cubic feet a day in 2040, up from 0.5bn cf/d in April this year and 1bn cf/d in 2023.” Last year the government approved the second phase of the North Kuwait Jurassic Gas project as part of efforts to expand non-associated gas production. Six major fields containing tight gas have been discovered in the north of the country. Over the years, efforts to import pipeline gas from Qatar have failed and Kuwait appears to have abandoned that option. At present, it imports liquefied natural gas to help meet rising domestic demand. Adsani said that all future power plants would be gas-fired.
Kuwait is also expanding its refining capacity, at home and abroad. KPC is involved in three refinery projects. A 615,000-b/d facility is under construction at al-Zour on Kuwait’s Gulf coast, and refinery ventures are underway in Vietnam and Oman. Also, Adsani said, “we have recently commissioned a pre-feasibility study for the expansion of our refinery capability that will lift capacity by 300,000 b/d.” At present, Kuwait has two refineries in operation, Mina Abdulla and Mina al-Ahmadi, with combined production capacity of around 690,000 b/d.
Looking at the broader energy scene, Adsani told the conference that, at a time of energy transition, Kuwait faced “various complex challenges”. KPC was operating “in a rapidly evolving internally and externally challenging environment”, with growing focus on natural gas and renewables. But another challenge was raised in a keynote address by Adi Karev, Global Oil and Gas Leader at EY. “What happens,” he asked, “when the buyer has a choice? The choice is not just the supply of the same commodity, but alternatives to hydrocarbons.”
Read full article by Gerald Butt on Petroleum Economist, February 5, 2018