Kuwait plans to increase oil production to 4 million barrels a day (b/d) by 2020, according to a senior executive.

The bulk of the increase in output will come from state-owned upstream operator, Kuwait Oil Company (KOC) at 3.65 million b/d, says Sami al-Rushaid, chairman and managing director of KOC.

The remainder will come from Kuwait Gulf Oil Company’s operations in the divided zone with Saudi Arabia, Al-Rushaid told delegates at MEED’s Kuwait Projects 2010 conference in Kuwait.

Over the next five years alone, Al-Rushaid expects KOC to spend some KD7bn ($24.9bn).

“We will have a number of challenges. Heavy oil is new to us. Another is EOR [enhanced oil recovery], so we will need assistance and cooperation from the international oil companies,” says Al-Rushaid.

“We are open to suggestions that are applicable to us without contradicting our constitution,” says Al-Rushaid.

Under Kuwait’s constitution it is illegal for foreign companies to own any of its natural resources, making the traditional production sharing agreements usually employed by IOCs impossible to use. This leaves technical service agreements as the only way forward.

In October, French oil major Total has signed a technical services agreement worth $27.6m with KOC to help develop its heavy crude oil deposits, which total some 13 billion barrels (MEED 24:10:10).

Kuwait is planning to produce between 250,000 to 270,000 b/d of heavy oil from its northern fields. The scheme is described as a ‘gap-filler’ to ensure Kuwait reaches its 2020 target of 4 million b/d, since it is much more expensive to exploit than conventional oil reserves. Pilot schemes are currently under way, but the first commercial production of around  60,000 b/d is not expected until after 2015. 

Production is targeted for the stalled Al-Zour Refinery, which state-refiner Kuwait National Petroleum Company (KNPC) hopes to restart.

“The economics of the refinery work better with heavy oil for which it was designed. All 60,000 barrels a day would go to the refinery to produce low sulphur fuel oil for power plants,” says Al-Rushaid.