Surge in costs drives increased investment into oil expansion programme over next five years.
The Gulf state of Kuwait plans to spend $51 billion over the next five years to upgrade its vital energy sector which generates 95% of its revenue, a top oil executive said Monday.
"We plan projects worth $51 billion for upstream and downstream projects in the oil sector... up until early 2013," said Saad Al-Shuwaib, chief executive officer of national conglomerate Kuwait Petroleum Corp (KPC).
The projects include raising Kuwait's oil output capacity from 2.7 million barrels per day (bpd) to four million bpd by 2020, besides building a large refinery and upgrading existing refineries, he said.
Shuwaib told a conference organised by MEED magazine that the plan also includes crude export facilities and an intensive drilling project to raise output.
The new figure represents a sharp increase as initial estimates had projected spending around $66 billion in the energy sector through to 2020.
Conference speakers attributed the increase to a surge in the cost of projects in general and the energy sector in particular over the past five years as a result of the spike in crude prices, which hit $100 a barrel earlier this year.
The oil output expansion involves the controversial Kuwait Project which seeks the assistance of international oil companies to develop the nation's northern oilfields, Shuwaib said.
The estimated $8.5 billion project aims to double production to 900,000 bpd from four oilfields but has been stalled for more than a decade by the opposition-controlled parliament.
Shuwaib said KPC plans to expand its exploration of untapped areas in Kuwait, which is the fourth largest OPEC producer and sits on about 10% of global crude reserves. Current output is pumps around 2.5 million bpd.
"So far, we have only been working on less than one-third of Kuwait's total area. Now, we plan to start exploration and drilling in other areas," he said.
Ahmad Al-Jeemaz, deputy managing director of Shuaiba refinery, told the conference that more than $20 billion will be spent for the development of Kuwait's downstream sector.
It involves the construction of a new 615,000 bpd refinery at a cost of $14.6 billion and upgrading two of the three existing refineries in a multi-billion-dollar project.
The two projects will raise Kuwait's refining capacity from the current 936,000 bpd to 1.415 million bpd by March 2012 when the new refinery is set to come on stream, he said. The Shuaiba refinery will then be retired.
Jeemaz said Kuwait plans to announce winners of the new refinery project next month.
Kuwait has prequalified 17 international companies which are bidding in consortia for the project, which was divided into four parts and will be implemented on the basis of a cost-plus profit margin.