Kuwait fights energy poverty

Global energy GDP is estimated to grow at 3.8% per year, a rate that will continue to rise until it doubles by 2030, according to OPEC’s World Oil Outlook 2007.

Figures indicate that oil demand will rise from the 2005 level of 83 million barrels per day to 118 million barrels per day by 2030, and 65% of the growing demand is expected to come from the OPEC countries.

Prices for oil are currently hitting all-time highs (at the time of writing it was $111 per barrel). Kuwait has forecasted a budget deficit of $18.5bn and oil revenues of $43.02bn, although these forecasts would have been made when oil prices were still in the sub-$100 a barrel level.

Maximising Production

Kuwait has proven crude oil reserves of 100 billion barrels, making it the fifth largest in the world. However, the country needs to increase its production capacity, which accounted for 2.66 million barrels per day by end of 2006.

Through an extensive growth strategy, Kuwait Petroleum Company (KPC) wants to push its production capacity to four million barrels per day by 2020, and one means of doing that will be by maximising exploration and developing and producing non- associated natural gas in Kuwait.

The country has recently discovered free gas fields and production is expected to start by the end of this month. In the mean time, Kuwait imports gas from Iran, Iraq and Qatar, although it will continue those imports once production begins, as consumption rates are expected to grow substantially.

Al Shuwaid said KPC plans to modernise all existing oil facilities, building new ones along with crude export facilities, in addition to setting up an intensive drilling plan.

The company is also eying some other potential fields in the country, namely refining and petrochemicals. Here, KPC wants to increase Kuwait’s refining capacity up to 1.5 million barrel per day by 2012 by building a grass-root refinery, which will have the capacity of 615,000 barrels per day. KPC hopes the refinery will provide environmentally-friendly fuel with low sulfur content. This will also be done by importing LNG for Kuwait’s power stations use.

Clean Fuel Project

As part of its expansion strategy, KPC will take on more challenges in the petrochemicals industry, mainly through executing Olefins II, Aromatics and Styrene complexes inside Kuwait. Currently, Kuwait has two plants producing ammonia, a polypropylene plant producing 140 thousand tonnes per annum, in addition to shares in regional and international companies such as Equipolymer in Germany, MI Global in Canada and Gulf Petrochemical Industries in Bahrain.

To get clean energy Kuwait will boost its refining capacity through the ‘Clean Fuel Project’ for the production of environmentally-friendly petroleum products. And for the very same reasons, KPC is keen on adopting a zero flaring policy for both onshore and offshore upstream operations in the country, setting a target of 1% of gas flaring.

The overall investment KPC will need to carry out all its plans is $51bn over the next five years, an amount some experts question in the current inflationary environment.

Al Shuwaib said that another $100m has also been allocated for the adoption of new technologies, including hydrogen fuel cells, carbon capture and storage, and hydrogen generation from oil. This follows the Kuwaiti government’s announcement in January of its intentions to invest some $150m in scientific research related to energy, environment and global warming.

More Accessible Energy

Energy poverty remains a thorny issue in the world, and OPEC confirms that developing countries will consume, on average, approximately five times less oil per person, compared with OECD countries by 2030.

As part of its interest in helping to alleviate energy poverty, KPC is trying to make energy cheaper and is also looking for lower cost alternative sources for consumers on a regional scale, not only in Kuwait.

Al Shuwaib said the company is negotiating joint venture investments in upstream production worldwide, as well as looking at downstream opportunities worldwide, with the focus being on Asia.

The oil and gas sector accounts for 55% of Kuwait’s GDP, and its no wonder that the country’s expenditure bill, for the fiscal year that ends this month, accounted for $66.1bn.