The state wastes $4bn a year burning more than 100,000 barrels a day of oil at its power plants, which it could export. It is often covered by a cloud of pollution and its industrial sector has been hampered by a shortage of gas feedstock.
A lack of gas is a growing problem for other states too. Riyadh is extending its hunt for gas and Dubai is facing up to the prospect of importing liquefied natural gas (LNG).
While Kuwait has tried to import gas from Iraq, Iran and Qatar in the past, such deals have all failed. The hope is that the gas from the state’s northern fields will put these problems firmly in the past.
But any optimism should be tempered for now. Only 175 million cubic feet a day (cf/d) of gas is being produced, barely 10 per cent of the state’s total requirement.
And while the government says more than 1 billion cf/d will be produced by 2016, this will still not be enough given the country’s soaring demand.
It is a problem the state recognises. It is planning temporary imports of LNG and is building a refinery to supply low-sulphur fuel-oil to its power plants.
But, more than anything, it will be judged on how it uses its new-found non-associated gas. Other Gulf states have made errors in gas planning that have led them to either sign ill-judged export deals or allocate more gas to industry than they can provide.
It is a damning indictment that, in a region with 40 per cent of the world’s gas reserves, countries are having to consider the use of alternative fuels.
It is a trap Kuwait will have to continue to work hard to avoid.
You might also like...
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.