Kuwait Energy

Plans for a major new refinery and record exports to Asia have led to heady estimates of Kuwait’s oil revenues for 2012 and the sector is looking to innovative techniques to extract huge reserves of heavy oil.

Thanks to growing global demand for plastics in 2011, Kuwait’s petrochemicals companies reported improved financial results last year. Moreover, the sector looks set to expand, with the government investing in new facilities and taking steps to ensure that the industry has a sufficient supply of natural gas.

Oil production in Kuwait continues to increase, having reached 3m barrels per day (bpd) as of early December. Output could expand further in the longer run, according to officials from the Kuwait Oil Company (KOC), which recently said that it would be necessary to tap into the country’s heavy oil reserves to reach its 4m bpd capacity goal by 2020. At the same time, the country is also looking abroad for additional energy sources.

With a recent increase in oil production and global crude prices above $100 per barrel, Kuwait is expected to run a substantial fiscal surplus in 2011 thanks to its hydrocarbons export revenues. But the country is looking beyond the market for crude oil and investing in refineries both at home and abroad.

With the recent addition of a new 1400-MW power plant, Kuwait appears ready to meet the increase in electricity demand that occurs every summer. Government authorities are also planning to bring additional capacity on-line over the next few years, with the private sector expected to play a major role in this expansion.

Investor confidence in Kuwait’s energy industry should get a welcome fillip from reports that the state-owned oil company is set to increase domestic oil refining capacity by more than 50% over the next five years.