Kuwaiti oil sector to expand 4% in 2014

Kuwait's oil sector will remain as a vital driver of economic growth and is expected to expand 4.0% in 2014, said a Kuwait Finance House (KFH) report issued on Friday As the world's eighth-largest oil producer (accounting for over 3% of global production), oil income comprises over 90% 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 101.5bln barrels (while another 5bln 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 4mln barrels per day of production capacity by 2020, said the report. In December 2013, Kuwait's oil production dropped slightly to 2.90mln barrels per day - the third straight months of below 3.0mln output. However, it still remains higher than last year's average of 2.79mln 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 29.955mln barrels a day from 29. 988mln 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 30mln 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 30mln barrels a day in the first quarter of 2014 and that is a major support for the stability of current price levels, according to Mohammed al-Shatti, Kuwait's national representative to OPEC. Details also showed Venezuelan production dropped 235,000 barrels a day to 2.45mln 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 1.28mln barrels a day in the first six months of 2013 before tumbling, according to data compiled by Bloomberg. Two years after the war that swept the late Muammar Qaddafi from power, government efforts to revive the oil industry are being stymied by feuding militias and protests, said the report. Kuwait's efforts to develop its heavy oil capacity are part of the country's plan to increase overall crude oil output to 4mln barrels per day by 2020 from current production of approximately 3.0mln 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. Meanwhile, the price of Kuwait Export Crude (KEC) declined to USD105.76 per barrel as at 3 January 2014, in line with other global oil prices. US crude was unchanged at USD95.44 per barrel after earlier touching a one-month low of USD95.13 per barrel. On Thursday 2 January 2014, the contract posted its biggest daily fall since November 2012, said the report.