First Published 2005-12-09, Last Updated 2005-12-09 09:39:37
Kuwait to pump 44 billion dollars into oil
Multi-billion dollar investment is aimed at upgrading oil industry, boost output to four million bpd.
By Omar Hasan - KUWAIT CITY
The Gulf state of Kuwait has earmarked more than 44 billion dollars over the next 15 years to upgrade its oil industry and boost output to four million barrels per day (bpd).
"Total estimated investments in the oil sector from 2005 to 2020 will exceed 44 billion dollars. We aim to modernise the sector and boost output to four million bpd," energy ministry undersecretary Issa al-Oun said as Kuwait prepared to host a meeting of the OPEC cartel on Monday.
The money will be spent on mega projects such as a large refinery and upstream projects to raise output, in addition to a number of large petrochemicals plants, he said.
Kuwait, which sits atop 10 percent of the world's proven reserves of around 100 billion barrels, has the fifth largest OPEC quota at 2.227 million bpd but its actual production is around 2.5 million bpd.
Boosting production capacity from the current 2.7 million bpd to four million bpd by 2020 will cost the OPEC member an estimated 20 billion dollars on projects including upgrading production facilities, pipelines, gathering centers, booster stations and export terminals.
This year, Kuwait Oil Co (KOC), which operates upstream activities in the Gulf emirate, awarded three major contracts worth 3.3 billion dollars to two South Korean companies and a British-based firm.
It ordered a 1.25-billion-dollar oil terminal from Hyundai Heavy Industries with oil storage tanks and offshore pipelines for Al Ahmadi Port, Kuwait's main oil export terminal.
KOC also signed a 1.2-billion-dollar contract with South Korea's SK Engineering for 10 oil gathering centers and a gas booster station.
British-based oil services firm Petrofac won a 680-million-dollar contract to install hundreds of kilometres (miles) of pipelines above the ground to replace old underground pipelines in addition to 125-million-dollar maintenance deals.
All these projects are due to be completed in 2008.
And despite controversy, the emirate also appears to be forging ahead with Project Kuwait, an 8.5-billion-dollar investment to develop four oilfields in the north with the help of foreign oil majors.
It aims at raising production of the fields from 530,000 bpd to 900,000 bpd over a 20-year period.
Parliament is due to debate the project on January 16 amid fears by opposition MPs that it would give foreign companies control of Kuwait's vital oil wealth.
The project, if approved, would be the largest foreign investment in the country's upstream oil resources since nationalisation of the sector in the 1970s.
A number of projects are also in the pipeline to raise production at oilfields in south and southeast Kuwait, Oun said.
Almost two-thirds of Kuwait output at present comes from Greater Burgan oilfield, the world's second largest after Saudi Ghawar, and the new projects aim at easing pressure on it.
State-owned Kuwait Oil Tanker Company this year signed contracts to build seven oil tankers of different sizes to modernise its fleet at cost of more than 600 million dollars.
The emirate is planning to build a new refinery with a capacity of up to 600,000 bpd at a cost of 6.3 billion dollars. It is scheduled to be onstream in 2010.
It also plans to upgrade two of three existing refineries at a cost of between three to four billion dollars. The third refinery at Shuaiba will be closed down when the projects are completed in 2011.
That will boost Kuwait's refinery capacity from 920,000 bpd now to 1.2 million bpd.
A number of giant petrochemicals plants, at an estimated cost of around 10 billion dollars, are under establishment with the help of foreign companies, led by the US Dow Chemical, Oun said.
In addition, Kuwait on Monday signed a memorandum of understanding with China to build a refining and petrochemicals complex in the Asian giant at a cost of five billion dollars. It will be completed in 2010.
It has also offered to build a modern refinery in the United States at an estimated cost of around 10 billion dollars.