Page 7 - MEOG Week 17 2022

MEOG POLICY & SECURITY MEOG

Kuwaiti upheaval to have

oil and gas knock-on

KUWAIT KUWAIT’S oil and gas sector is expected to face a production decline that saw 2021 output sink
significant challenges in launching planned pro- to a 12-year low of just over 2.6mn barrels per
jects and the restructuring of the emirate’s state day (bpd).
oil giant following the government’s resignation KPC CEO Hashem Hashem said last year
early this month. that KOC would drill up to 500 new wells each
The government of Prime Minister Sheikh year as well as around 2,000 workover wells as
Sabah al-Khalid resigned on April 5 – the third part of its target to increase production, particu-
time such action has been taken in the past year larly from the northern Jurassic reservoirs, using
– as parliamentarians again signalled their inten- 71 drilling rigs and 62 workover rigs.
tion not to co-operate with the premier, paralys- Meanwhile, in September a company source
ing efforts to implement a long-awaited law that was quoted telling the local Arabic language
would enable Kuwait to raise international debt. Aljarida daily that the annual figure could be as
Meanwhile, the resignation provides yet high as 700 wells as KOC implements a $6.1bn
another stumbling block for the restructuring of capital programme on exploration activities
Kuwait Petroleum Corp. (KPC), and thereby the until 2026/27.
country’s oil industry. The drilling push will be required if KOC is
In 2020, US-based Strategy&, formerly Booz to have any chance of achieving the Ministry of
& Co., kicked off a study for KPC for the restruc- Oil (MoO) and KPC’s targets of driving oil pro-
turing of the sector and reducing KPC’s affiliates duction capacity from the current level of 3.2mn
from eight to four. The study began as KPC was bpd to 3.5mn bpd by 2025 and 4mn bpd a decade
forced to reassess its capital programme, and later, with the latter target having been brought
reduced capital spending in its 2020-2025 five- forward by five years during 2021.
year plan. However, the government’s departure is likely
In early 2021, a company source was quote by to cause more delays.
the local Al-Anba Arabic language daily as say- Another local Kuwaiti newspaper, Al-Rai,
ing that the Supreme Petroleum Council (SPC) this week quoted an industry source as saying:
and KPC had approved the plans, “including “Not all major projects will be able to obtain
cutting the number of operating companies the necessary approvals and signatures. We will
through mergers and reducing industry activ- witness significant delays in all areas. Only very
ities to three main sectors comprising produc- small projects will achieve great progress. It is
tion, exploration and refining.” The restructuring expected that there will be delays in announc-
is now understood to be in its final stages, but ing projects, offering tenders and awarding
has been put on hold until a new government is contracts.”
formed. Another source added: “This is a real disas-
Meanwhile, local media quoted sources as ter for the oil and gas sector in Kuwait at a time
saying that the latest resignation has taken the when many were hoping to see an improve-
wind from the sails of KPC’s upstream arm, ment” on the back of higher oil prices, buoyant
Kuwait Oil Co. (KOC). The firm has been demand and an easing of OPEC+ production
expanding drilling activities in order to reverse restrictions.™

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