Kuwait cuts oil output amid workers strike

18 April 2016

Crude production and refining hit by direct action on alleged pay cuts

Kuwait has slashed oil production and refinery operations as thousands of Kuwaiti workers strike over alleged public sector pay cuts, according to statements by state-owned oil companies.

Saad al-Azmi, a spokesman for upstream producer Kuwait Oil Company (KOC), posted on the company’s official Twitter account on 17 April that the company had cut crude output to 1.1 million barrels a day (b/d). KOC produced an average of about 2.8 million b/d in the first three months of 2016, according to Opec estimates.

Impact of oil workers’ strike on Kuwait output
 Previous17 April 2016Change
Crude production (b/d)2.7 million1.1 million-59%
Refinery throughput (b/d)930,000520,000-44%
Gas production (cf/d)1,600 million620 million-61%
b/d=Barrels a day; cf/d=Cubic feet a day. Sources: Official Kuwait oil sector statements; MEED

Kuwait National Petroleum Company (KNPC) cut refining output to 520,000 b/d from 930,000 b/d before the strike as part of a contingency plan.

A statement from KOC on 17 April said Kuwait was producing 620 million cubic feet a day (cf/d) of natural gas. In recent years Kuwait has produced an average of about 1.6 billion cf/d.

“What concerns the company is securing the necessary supplies for the domestic market,” KNPC’s CEO Mohammed al-Mutairi was quoted as saying by the official Kuwait News Agency (Kuna).

There have been mixed messages from the Kuwaiti oil industry’s official channels. Sector spokesman Talal Khaled al-Sabah told Kuna that KOC oil and gas production was on the rise “and reaching normal average figures is not far”, adding that retirees and contract workers were being recalled. He said KNPC’s three refineries were operating normally and fuel supplies were reaching local petrol stations and power stations.

Al-Sabah said a fertiliser plant was closed down on 17 April, but has since resumed operations. Gas cylinder filling tanks in Shuaiba and Umm al-Aish returned to normal daily production after the Kuwait National Guard took over operations.

The country’s stockpile of gasoline and other oil products are sufficient for 25 days and the national strategic stockpile would last 31 days, the spokesman added.

The Oil and Petrochemical Industries Workers Confederation started its strike on the morning of 17 April, after announcing the direct action last week. Kuwaiti workers gathered at Ahmadi, the town where KOC has its headquarters. Non-Kuwaitis did not go on strike, according to reports.

Kuwait is the fifth-largest crude exporter in oil producers’ group Opec and among the world’s ten biggest oil producers. If the country continues to produce crude at less than half capacity, it is likely to have a significant effect on global oil supply.

It is unclear when the strike will end.

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