The Kuwaiti oil sector is standing on the threshold of a bright new era of progress and prosperity.
What with large projects already in motion and bigger ventures all set to start, the Kuwait Petroleum Company's (KPC) present and the future never looked brighter.

The strategic directions for the year 2020 indicate that the only way to go from this point onwards is up. To ensure the application of all strategic plans, KPC and its subsidiary companies are operating in two parallel lines: on the one hand, continuously developing existing operations, while on the other, launching a number of major projects to strengthen the sector's business for several decades ahead.
The Corporation announced the start of several big projects and investment opportunities that will ensure the enhancement of upstream and downstream activities, creation of new job opportunities, bigger dividends for the oil sector, and competitive investment opportunities for the private sector.
Market analysts observe that there is a strong sense of optimism, which prevails in the oil sector and Kuwait in general. They believe that Kuwait has positioned itself as the Gulf's new commercial gateway.
It is driven by an increasing desire to modernise its infrastructure and launch development projects directed toward increasing and developing its sources of revenues and achieving a more active national economy. The decision-makers at KPC recognising that the Corporation is an integral part of the economy of Kuwait, are looking forward to enhancing production and processing capabilities in various areas in order to increase revenues, distribute income and strengthen Kuwait's position as a major global energy producer.
There are several key projects in the pipeline that were launched by the Ministry of Energy and the Corporation.
These projects include plans to enhance refining capacity, and KD3.3 billion ($11.3 billion) has been earmarked for the building of a new refinery to raise the refining capacity to a million barrels per day (bpd).
Another project is to build a new pier and to upgrade the Northern Export Pier at Ahmadi Refinery. With regard to exploration and production, several large projects are being executed at a total cost of KD6.5 billion in order to increase production capacity to four million bpd. These include increase of production through Kuwait Project to develop the northern fields with the assistance of international oil companies.
Furthermore, KPC has optimistic expectation for several large petrochemical projects with a total cost of KD1.8 billion, including the Aromatics and Olefins Complex, and also in electricity and water development, where the Ministry of Energy has plans for large projects in transmission networks and distillation plants at a cost of several hundred million Dinars.
As it commemorates its silver jubilee, KPC has entered a major phase of expansion in the oil sector in Kuwait. Recent estimates of long-term oil demand from the IEA indicate that world demand for oil will increase from the current level of 80 million bpd to 120 million bpd over the next 25 years, and with the Middle East holding half of the world's oil reserves, it will meet at least two thirds of the increase in demand. It follows that this will require an increase in capacity from Kuwait.
As mentioned earlier according to KPC's strategic directions until the year 2020, the oil sector seeks to achieve the following goals:
- In the upstream sector to reach a crude oil production capacity of 4-5 million bpd
- In the downstream, to study the expansion of refining capacity up to 1.5 million bpd by 2010, whilst meeting the local energy demand, and using the future heavy oil availability.
- In chemicals, to expand inside Kuwait, into chemical projects integrated with oil activities and develop the new aromatics and olefins projects, preferably with joint venture parties, and to focus on the chemicals with high growth potential.
These three plans alone will require KPC to spend about KD1.6 billion or close to $40 billion over the next 20 years. This number would increase by another $5 billion, if KPC targeted five million bpd.
According to a study released by the IEA, oil companies will have to invest up to $5.3 trillion over the next 30 years to supply the world's increasing demand for oil and natural gas. That would include $2.2 trillion in investment for new oil production, as worldwide demand for oil surges to 120 million bpd by 2030 from 77 million bpd in 2002.
KPC is set to expand its production capabilities in such a way as to maximise return on the invested capital, while observing ecological factors and preserving the environment, and finally, improving contractual relations with our partners, both financiers and contractors. These targets are challenging to say the least, however, there is strong determination to carry them out.
Kuwait's plan to upgrade northern oilfields with international oil firms will cost $9 billion over a 20-year period, nearly 30 per cent more than previous estimates, a senior oil official says.
"The international oil firms should provide the required capital estimated to be $9,000 million, or the equivalent of 2,800 million Kuwaiti dinars, during the contract's life which is 20 years," Ahmad Al Arbid, the Kuwaiti official in charge of the ambitious plan, said.
He did not give details of why the cost had increased from the previous estimate of $7 billion. Project Kuwait aims to hike production from the four major northern fields of Rawdhatain, Sabriyah, Ratqa and Abdali to about 900,000 barrels per day from the 530,000 bpd, Arbid said.
Opec member Kuwait produces a total of about 2.3 million bpd but plans to hike its output to four million barrels in 2020.
Three consortia led by London-based BP and US-based ExxonMobil Corp and Chevron Corp are competing for the plan which is now again being studied by parliament's finance and economics committee.
"It seems to us there's tangible progress and positive indications as a result of the changes undertaken on the project plan to make it more in line with parliament's orientation," Arbid said. "We hope this project will be approved soon."
Project Kuwait is opposed by some powerful lawmakers, who do not want foreigners to be brought into the lucrative upstream sector in the Gulf country which controls nearly a tenth of the world's petroleum reserves.
Energy Minister Sheikh Ahmad Al Fahd Al Sabah has sought to allay those fears, stressing repeatedly that under the deal to be signed with the companies the state will be in full control of its hydrocarbon resources.
Arbid said that the foreign companies will not own any of the produced oil and would not have the right to price it or market it. The assets that these companies will operate or add to service will be owned by the state, he said.
"The companies .. will receive specified wages for each (oil) barrel produced as well as other cash wages for operational services to be provided by these firms," Arbid said. "The wages will not be impacted by oil prices."
Under the contract, 60 per cent of the workforce has to be Kuwaiti, rising to 80 per cent during the first decade of the 20-year contract. All will have to be trained by the foreign companies, Arbid noted.
"The international oil firms' responsibility will be the day-to-day administration of the oilfields," Arbid said. "The strategic administration of the fields will be the state's responsibility."
Undersecretary of Kuwaiti Ministry of Energy Essa Al Oun said Kuwait was sparing no efforts to implement its strategy to increase oil production to four million bpd.
Oun said the strategy also included the construction of new refineries, product improvement and the expansion of oil tankers' capacity.
He said the oil sector revived the Kuwaiti economy by allowing the private sector to take part in oil and gas projects.
Shekh Ahmad has said he hoped the parliamentary committee considering Project Kuwait will complete its work in April. State oil planners headed by Sheikh Ahmad have been presenting the technical, economic and legal framework of a government-sponsored draft law for Project Kuwait to parliament's Finance and Economic Committee in a series of meetings, hoping to win approval for the proposal so the draft law can be presented to the house of representatives.
Meanwhile, the Kuwait Oil Co (KOC) has begun two new gas exploration initiatives with foreign help in its northern and western fields the company's chairman, Farouk Al Zenki, said.
He said that KOC began the new gas exploration at North West Rawdatain (NWRA) and at the far western field known as Kara al-Marou.
In a move that overshadowed Opec's recent agreement in Isfahan, Iran, to raise its output ceiling by two per cent from April 1, Kuwait and Saudi Arabia said they would keep adding output to meet demand.
The pair ultimately plan to add at least 700,000 bpd of fresh oil by the second quarter, delegates said.
Sheikh Ahmad said Kuwait had 120,000 bpd of new capacity coming onstream by the end of April, with a further 60,000 bpd of surge capacity available for emergencies.
Officials say Kuwait is currently pumping 2.6 million bpd.
Several factors have led to speed up the construction of Kuwait's fourth oil refinery, including the construction of the Zor power generation station, due to be completed in 2007, says a senior KPC official.
KPC's managing director for finance and planning, Suhail Bukreis, said that Kuwaiti oil officials were now seeking ways of providing enough gas to operate the new power station, which would be operational by 2007, bearing in mind that the new refinery will not be ready before 2010.
The refinery, at a construction cost of KD1 billion Kuwaiti ($3.3 billion), will have a capacity of 450,000 bpd.
Meanwhile, Kuwait and Iran have signed a $7 billion, 25-year deal, under which Tehran will supply some 10 million cubic metres of natural gas daily to the emirate. Delivery is scheduled to begin in 2007.
Zanghaneh said he expected a final contract to be signed within six months.
In another development, Kuwait Petroleum International (KPI) and BP PLC have signed a memorandum of understanding (MOU) to investigate and develop opportunities for future joint investment in China and elsewhere in Asia.
The official restart of a major gathering centre at a northern oilfield, brought the Gulf Arab state's maximum crude production capacity to 2.8 million bpd.
After years of delays, KOC has floated a new tender for a $1 billion project to expand its oil and product export
facilities.
The project aims to increase Kuwait's oil export capacity in line with the state's plans to increase oil production.
KOC had cancelled a tender for the project a few years ago and the project was delayed again several times
afterward. According to plans for the proposed expansion, KOC is to build two loading piers for VLCCs, a pumping station, a power plant, lay an estimated 20 km of gravity lines and install buoys.
KOC has also signed a $125-million five-year contract with UK-based Petrofac covering the maintenance of upstream oil and gas production facilities in the emirate's northern and western fields.