Oil and gas are the main source of revenue for Kuwait’s economy, and it heavily depends on it. The country has one of the world’s largest reserves of oil and gas, which amount to about 102 billion barrels positioning it among the top ten oil producers. That means Kuwait enjoys the lowest cost of production more than any other oil province globally. The oil revenue gives the country more than half of its entire GDP.
The recent fluctuation in prices has made Kuwait start thinking of how to diversify and reduce too much reliance on oil revenues. The idea is due to a slump in global prices that have led to the financial budget deficit, which is historical and the first time in Kuwait. The new developments are happening when, in recent years, Kuwait has slowly been reducing American alliances and opening gates to others for business.
The surprising global crude oil prices have driven Kuwait to start a remedial process that is long-term. The new plan is dubbed vision 2035, and it has a 7-pillar program that aims at securing the country’s future economic sustainability and diversification.
Oil & Gas Sector Strategy 2040
Regardless of the recent economic challenges, Kuwait’s oil and gas sector, together with a national oil company, and Kuwait Petroleum Corporation (KPC) are the country’s labor market and economy key pillars. Kuwait Petroleum Corporation has a strategy of investing about $500 billion by the year 2040 to help pursue a significant increase in Hydrocarbon production.
The large investment portfolio helps to cover both downstream of projects to increase Kuwait’s share of petrochemical product market and global petroleum. Also, they cover the development of upstream infrastructure to raise crude output volume.
The KPC strategy is planned to imitate other global trends that are enhancing the oil and gas industry. It includes a constant long-term global demand for crude; transference of oil demand from Europe to Asia; increasing global demand for refined products, petrochemicals, and natural gas; and the unavoidable move to renewable energy resources.
KPC and Subsidiary Companies Strategies
- Improvement of new hydrocarbon resources like heavy, offshore and unconventional fields.
- The building of a new Kuwait Greenfield refinery which exceeds 600, 000 barrels per day capacity to help provide low sulphur fuels to the power stations. This idea will as well feature an incorporated petrochemical complex.
- Satisfying crude oil production from the existing reservoirs using the application of new technology, such as improved oil recovery.
- It is utilizing renewable technology that is aimed at reducing energy consumption in the oil sector, including a 1000 MW solar PV plant to meet the needed 15 percent forecast energy demand by the year 2020 and enhancing building offices that meet greener standards.
- Another plan is building of Liquid Natural Gas (LNG) import facility that is capable of providing greater flexibility and security in meeting domestic power requirements.
Kuwait is no doubt determined to meet long term global hydrocarbon demands in future, despite the environmental and economic uncertainties. Kuwait has experienced the pain of suppressed crude oil prices that have affected the normal flow of revenues and impact on the country’s fiscal budget. However, Kuwait is planning to continue its effort to invest more across the oil and gas sector both locally and internationally.