Kuwait pumps 2.5mn bpd oil, more capacity soon

MAJOR EXPORTER: File photo of oil tankers in Ahmadi Port in Kuwait City. (Getty Images)

OPEC-member Kuwait is pumping at around 2.5 million barrels per day (bpd) of crude oil and aims to boost capacity to 3 million bpd in the first half of 2009, a top oil official said on Monday.

The world's seventh-largest oil producer is sticking to the production target of 2.53 million bpd set by the Organization of the Petroleum Exporting Countries (OPEC) and has about 200,000 bpd to 300,000 bpd of spare capacity, said Saad Al-Shuwaib, the chief executive of state oil firm Kuwait Petroleum Corp (KPC).

"We are producing around 2.5 million bpd, at the quota," he told newswire Reuters in an interview. "We have a little spare capacity in case it's needed... we hope by the first half of 2009 to reach 3 million bpd."

Kuwait boosted output to 2.8 million bpd in July to ease the market and meet demand, Al-Shuwaib said.
Kuwait's informal OPEC output target is 2.53 million bpd.

Top oil exporter Saudi Arabia pledged to boost its output to the fastest rate in 27 years in July, well above its OPEC target, to help meet rising demand and tame runaway oil prices.

Kuwait is on course to meet its long-term capacity target of 4 million bpd in 2020 despite political hurdles at home, spiralling costs for oil projects and a tight market for contractors, Al-Shuwaib said. "This target is achievable," he said. "We're not really worried that we will not reach this number."

Among the projects to raise capacity is the controversial Project Kuwait, which should finally be discussed by parliament in the next session due to convene in October, Al-Shuwaib said. "This time I am sure Project Kuwait has to make it to the floor," he said. "It has had full discussion in the past at committee level."

The plan to boost oil output from northern fields with the help of international companies was first proposed over a decade ago, but has never made it past parliamentary committee level due to opposition from some MPs to the involvement of foreign firms in oil and gas production.

Kuwait's fields are off-limits to foreign investors. Another component of Kuwait's plan to raise capacity is a new round of technical service contracts with international oil firms.

Kuwait has missed a self-imposed July target to sign a deal with oil major Exxon Mobil to boost heavy oil output, but still hopes to sign this and other contracts by the end of 2009, Shuwaib said. Other companies negotiating for contracts are Royal Dutch Shell, Chevron, and BP.

Shuwaib said he hopes to receive final approval from Chinese authorities for a new 300,000 bpd joint venture refinery and petrochemical plant in Guangdong in two or three months.

KPC and its Chinese partner Sinopec Corp received preliminary government approval for the plant in 2006, but are still waiting for the nod from China's National Development and Reform Commission (NDRC), Al-Shuwaib said. Sinopec is Asia's top refinery.

Once approved, Kuwait will finalise two additional international partners for the plant "within months", he added. Kuwait has shortlisted Royal Dutch Shell as a partner on refining and Dow Chemical Co for petrochemicals.

Kuwait will supply all the crude to the plant, which is expected to cost around $8.5 billion to $9 billion to build. In India, talks with potential partners for a future refinery and petrochemial joint venture there remain at a preliminary stage, Shuwaib said.

KPC aims to boost exports to both countries, as it looks to take a bigger share of Asia's growing demand for oil. "We are going where there is natural growth of oil demand in the world," Al-Shuwaib said.

Kuwait has yet to finalise negotiations with Qatar for the imports of liquefied natural gas (LNG), Al-Shuwaib said. It wants to begin imports of LNG from Qatar in the summer of 2009 to help fuel power generation to meet peak demand. Output from non-associated gas fields in the north of the country has reached 175 million cubic feet per day (cfd), Al-Shuwaib said. Condensate and light-oil output from the same fields stood at 50,000 bpd, he added.

Kuwait aims to boost non-associated gas output to 600 million cfd in around 2011-2012 and to 1 billion cfd by 2016. (Reuters)

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