While the last decade has seen unprecedented spending on oil, gas and petrochemicals projects across the GCC, Kuwait has found itself lagging behind. From 2001 to 2011, the Gulf state awarded less than $30bn worth of contracts for upstream and downstream infrastructure, according to MEED Insight’s Kuwait Projects Market 2012 report, published in late February.

This figure was dwarfed by Saudi Arabia, which placed almost $125bn worth of engineering, procurement and construction (EPC) contracts in the period and the UAE with $75bn. Even Qatar, a traditionally smaller energy project market, awarded $50bn.

Of the $17bn worth of projects MEED Insight forecasts will be awarded in 2012, oil and gas, petrochemicals and pipelines will account for only 13 per cent. Infrastructure, by comparison will account for the lion’s share of contracts with 34 per cent.

Kuwait oil fields
Field Percentage of total output
Greater Burgan 55
Raudhatain 14
Sabriyah 9
Minagish 7
Umm Gudair 6
Al-Khafji/Wafra 5
Wafra 4
Source: Wood MacKenzie, MEED Insight

According to the Oil Ministry, Kuwait produced as much as 3.15 million barrels a day (b/d) in 2011. Kuwait is now hoping to boost production capacity to 3.5 million b/d by 2015 and as high as 4 million b/d by 2020.  To reach this goal, state-upstream operator, Kuwait Oil Company (KOC) will have to increase capacity at its existing fields, as well as develop the new fields in the north and step up exploration activity.

While KOC has been largely successful in driving up production at relatively low cost, question marks remain as to how it will meet its capacity targets. A significant proportion of the increase will have to come from the development of technically challenging heavy oil resources, something few regional oil companies have any experience with.

KOC is already planning to tender a series of contracts for the first phase of its heavy oil development in the north of the country. However, it remains uncertain whether international oil companies will have a role to play in the development, given the reluctance of Kuwait’s parliament to see any IOC presence in the country.

Kuwait oil ouput targets
Year Million barrels a day 
2011 3.15
2015f 3.50
2020f 4.00
Source: MEED Insight

According to MEED Insight, the 2015 target is achievable, requiring KOC to boost production from the northern fields by 100,000 b/d as well as another 130,000 b/d from the Raudhatain and Minagish fields.

The longer term 2020 target looks far more challenging. “KOC would have to maintain output capacity at the Burgan field at 1.7-1.8 million b/d; add some 700,000 b/d of oil and liquids from the northern fields; and bring on stream additional capacity to make up for a projected fall in production from its other existing producing assets”, says the MEED Insight report.

This will be difficult without IOC help.