High oil production targets for Kuwait Petroleum Corporation

12 October 2010

Kuwait’s energy sector has promised a lot, but delivered little. The new head of Kuwait Petroleum Corporation will need to move quickly to meet 2015 oil production targets

Key Kuwait oil fact

The Kuwaiti government has targeted increased production of 3.5 million b/d by 2015

b/d=Barrels a day. Source: MEED

Kuwait was one of the five founding members of Opec that met in Baghdad in 1960, and the country has remained a central figure within the organisation over the past half century.

Its status as a major producer has gradually been eroded by the growth of countries, such as Saudi Arabia and Iran, and declines in its own output.

Oil production target in Kuwait

Oil production in Kuwait peaked in 1972 at 3.3 million barrels a day (b/d), later grinding to a near halt after Saddam Hussain’s Iraq invaded the country in 1990. Since then, the government has targeted increased production of 3.5 million b/d by 2015. Initial plans had targeted output of 4 million b/d by 2020. Kuwait’s current production capacity stands at 2.8 million b/d. Although the state energy firm Kuwait Petroleum Corporation (KPC) is recognised to have some of the best indigenous engineers in the region, a combination of bureaucracy and politics have made progress slow.

Kuwait average daily crude oil production
YearThousand barrels a day
19601,692
19702,990
19801,664
1990859
20001,996
20092,262
Source: Opec

Political opposition to the involvement of international oil companies (IOCs) in Kuwait has made technically complex production plans difficult to execute. As a result, the country’s abundant supplies of heavy oil still remain unexploited.

The past two years have been periods of relative political calm, and in September, Farouk al-Zanki was appointed as the chief executive at KPC. Al-Zanki is seen as an industry reformer.

Slow progress

“It seems that the government is keen to push ahead with its plans, and has brought Al-Zanki in to sell them to parliament,” says a former top KPC executive. “He doesn’t pull punches and is ready to take politicians on. He is a real technocrat as well, so he will be well versed in the details of all of KPC’s plans.”

Al-Zanki will need to make up for lost time. In recent years, Kuwait’s hydrocarbons sector has promised a lot but delivered little.

“KPC is not inept,” says an industry consultant. “They can raise production, and every few years we hear that they have increased output by another 100,000 b/d. But the northern fields need to be developed. Something has to be done, but despite the [newly] cooperative parliament nothing has happened yet.”

Insiders say the government is keen to boost capacity to be guaranteed better production quotas in future. “With Iraq on the rise, everyone is looking at boosting production quicker,” says the former executive. “They want to make sure that if [the global crisis of] 2008-09 happens again they get a good slice of the pie.”

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