KUWAIT – Kuwait's oil sector will remain as a vital driver of economic growth and is expected to expand 4.0. percent in 2014, said a Kuwait Finance House (KFH) report on Friday. As the world's eighth-largest oil producer (accounting for over 3 percent of global production), oil income comprises over 90 percent of budget revenue and merchandise exports in Kuwait, said the report. The country is home to the seventh-largest proven oil reserves in the world at 101.5 billion barrels (while another 5 billion barrel is located in the Partitioned Neutral Zone field shared with Saudi Arabia). As a member of the Organization of the Petroleum Exporting Countries (OPEC), Kuwait was the world's 10th largest oil producer in 2012. Despite having the second smallest land area among the OPEC member countries, Kuwait exports the third largest volume of oil. The US Energy Information Administration (EIA) predicts that Kuwait will remain as one of the world's top oil producers as the country pushes towards a target of 4 million barrels per day of production capacity by 2020, said the report. In December 2013, Kuwait's oil production dropped slightly to 2.90 million barrels per day – the third straight months of below 3.0 million output. However, it still remains higher than last year's average of 2.79 million barrels per day, said the report. The slight drop in Kuwait's oil production is in line with the slowdown in recent OPEC's oil output and other member countries. OPEC crude production dropped to the lowest level in more than two years in December 2013, led by a decline in Venezuelan output. The output of the 12-member Organization of Petroleum Exporting Countries (OPEC) decreased 33,000 barrels to an average 29.955 million barrels a day from 29.988 million in November 2013, the survey of oil companies, producers and analysts showed. The November total was revised lower by 19,000 because of changes to the Kuwaiti and Ecuadorean estimates. Production slipped to the lowest level since July 2011 as ministers decided to keep their output target unchanged at 30 million barrels a day on 4 December 2013 in Vienna, said the report. OPEC is expected to produce at below the group's agreed ceiling of 30 million barrels a day in the first quarter of 2014 and that is a major support for the stability of current price levels, according to Kuwait's efforts to develop its heavy oil capacity are part of the country's plan to increase overall crude oil output to 4 million barrels per day by 2020 from current production of approximately 3.0 million barrels per day. The Ratqa engineering, procurement and construction (EPC) tender covers the first phase of the development with a target of 60,000 barrels per day of additional production by 2017. This will involve the construction of the production facility as well pipelines, steam-generation facilities and an oil export facility. The second phase is expected to boost production by an additional 120,000 barrels per day by 2020 and 270,000 barrels per day by 2030. According to the KOC, the target is that some 260 wells will be drilled in fiscal year 2013/14 as part of plans to drill around 1,500 wells in the first phase of the project, said the report. Moreover, the price of Kuwait Export Crude (KEC) declined to $105.76 per barrel as at 3 January 2014, in line with other global oil prices. US crude was unchanged at $95.44 per barrel after earlier touching a one-month low of $95.13 per barrel. On Thursday 2 January 2014, the contract posted its biggest daily fall since November 2012, said the report. Mohammed Al-Shatti, Kuwait's national representative to OPEC. Details also showed Venezuelan production dropped 235,000 barrels a day to 2.45 million in December 2013. The South American country pumped the least crude since October 2011. Resources have been diverted from energy sector into social welfare programs, sending production lower. Petroleos de Venezuela SA, the state oil company, was purged after a two-month oil strike intended to oust President Hugo Chavez from power in 2003. Nicolas Maduro, who became president in March when Chavez died, has continued his predecessor's policies, said the report. Meanwhile, Libyan output was unchanged 210,000 in December 2013, the lowest level since September 2011, the survey showed. Production averaged 1.28 million barrels a day in the first six months of 2013 before tumbling, according to data compiled by Bloomberg. Government efforts to revive the oil industry are being stymied by feuding militias and protests, said the report. — SG
