Argus Media Limited

10/29/2021 | News release | Distributed by Public on 10/29/2021 04:32

Kuwait sets roadmap to raise crude capacity: Resend

Changes KOC capacity figure in paragraph 5. Original story was published on 22 October

Kuwait has set ambitious targets to increase its crude production capacity following a few years of decline.

The country is aiming for 3.5mn b/d by 2025, chief executive of state-owned KPC Hashem Hashem said on 22 October. The day before, Kuwaiti oil minister Mohammed Abdul Latif al-Fares outlined a 4mn b/d target by 2035, to be retained until 2040. Kuwait's current capacity is near 3mn b/d, including half of the 550,000 b/d of capacity in the Neutral Zone that the country shares 50:50 with neighbouring Saudi Arabia.

KPC said its upstream subsidiary KOC plans to achieve the 3.5mn b/d target by commissioning two more gathering centres, building new water treatment and injection plants, upgrading existing Jurassic production facilities and adding two more plants to increase light crude production. It is also planning an integrated drilling programme that will average 500 wells a year and 2,000 workover wells.

KPC expects around 3.2mn b/d of the 2025 capacity to be within mainland Kuwait and 350,000 b/d in the Neutral Zone. This suggests that overall capacity in the Neutral Zone will rise to 700,000 b/d. Output from the Neutral Zone's 250,000 b/d offshore Wafra field and 300,000 b/d onshore Khafji field has languished some way below capacity since restarting in early 2020 after a more-than-four-year hiatus, but Hashem said he expects production from the area to return to pre-2015 levels by 2022.

KOC, which is responsible for all of Kuwait's upstream operations outside the Neutral Zone, revealed in its annual report a few days ago that its crude capacity was 2.63mn b/d at the end of March, down from 3.15mn b/d three years earlier. The lion's share of the capacity decline has been in the main producing region of southeastern Kuwait, where the ageing, giant Burgan field is located. Regional capacity has fallen by almost 300,000 b/d to under 1.4mn b/d in the last three years.

Hashem said the decline in KOC's capacity in recent years does not provide a complete picture of Kuwait's upstream sector as the company has 500,000 b/d of potential extra capacity waiting to be unlocked over the next two years.

Spare capacity

Kuwait's plans to boost its crude capacity coincide with mounting concerns over the Opec+ coalition's ability to fully unwind last year's production cuts by the end of next year. Some members of the group, notably Angola and Nigeria, have been having difficulty raising output because of infrastructure problems and natural decline at mature fields.

Kuwait is one of the few Opec+ members with spare capacity. It produced 2.46mn b/d last month, according to Argus estimates, and its Opec+ baseline is 2.81mn b/d. As of May next year, the country will work off a higher 2.96mn b/d reference production level.

Al-Fares reiterated that Kuwait is able to carry on increasing production within the confines of the Opec+ agreement to help meet international demand. Argus estimates Kuwait produced an average of 2.37mn b/d in January-September and exported around 1.8mn b/d over that period.

It is not alone in targeting capacity growth. Saudi Arabia plans to add 1mn b/d by 2027, which would take its capacity to 13mn b/d, while the UAE is pursuing a similar-sized increase to 5mn b/d by 2030. Compared with its Middle Eastern allies, Kuwait's decarbonisation targets are modest and perhaps less likely to hamper fossil fuel investment.

By Ruxandra Iordache and Nader Itayim