Production cut agreement helps balance market: Al-Rashidi

Oil Minister and Minister of Electricity and Water Bakheet Al-Rashidi

KUWAIT: Kuwait's oil production capacity will reach 3.255 million bpd by the end of next March, Kuwait's Oil Minister and Minister of Electricity and Water Bakheet Al-Rashidi said.

Al-Rashidi said in an interview with KUNA yesterday that the volume of Kuwaiti exports of crude oil is about 2.1 million barrels per day, while the daily production volume is about 2.7 million barrels per day in line with the agreement to cut production between the Organization of Petroleum Exporting Countries (OPEC) and producers from outside the cartel.

He said that the producers' agreement from within and outside OPEC to reduce production, which came into force in January 2017, contributed to the efforts to restore the balance of markets, which reflected positively on oil prices, which rose in the past period following improvement in the balance of demand and supply in the markets.

He explained that the agreement proved effective in controlling the balance of demand and supply in order to achieve balance in the markets, stressing that the fundamentals of the market will be reviewed at the Ministerial Conference of (OPEC) in June.

He pointed out that the recent decision on the extension of the agreement to reduce production until the end of this year will achieve the balance required by the end of next year amid an obvious recovery in the basic market factors associated with supply and demand.

Al-Rashidi pointed out that oil prices are affected by a combination of factors, most notably the recovery of growth rate of demand, improving the rate of growth of the global economy and the geopolitical and technical developments, which affect production of some countries.

No specific fair price

On the current oil prices, he said that there is "no specific fair price" because it changes permanently according to market conditions, as the price level reflects the state of the oil market, noting that the state of improving the fundamentals of the oil market will strengthen prices levels in the coming months.

With regard to the impact of US rock oil at price levels, he said that increased production led to imbalance of the market with the increase in supply, which contributed to the weakness of crude oil prices in previous years and other factors, pointing out that there are expectations of continued increase in rock oil production in the coming months.

On KPC's new strategy of producing 4.750 million barrels per day (bpd) by 2040, he said that the KPC has translated its strategic directions into a roadmap to ensure its achievement and supports Kuwait's domestic and international role as a reliable source of energy security.

He pointed to the need to invest in exploration and development of production, including the development of heavy and light oil production to achieve the goals set to raise the production capacity of Kuwaiti crude oil.

Al-Rashidi said that the strategy of the oil sector is always working to raise the volume of proved reserves through exploration operations and increase oil extraction rates.

On the impact of Kuwait's oil projects on the fluctuation of oil prices, he pointed out that they are strategic long-term and diversified projects covering all oil fields, stressing that the KPC is continuing to implement them regardless of fluctuating prices.

Al-Zour refinery

On the importance of the project of environmental fuel and Al-Zour refinery at the moment, he stressed that they are environmentally strategic projects aimed at protecting the environment and meet the local and global needs in accordance with the highest standards for the specifications of petroleum products.

He pointed out that the environmental fuel project aims to produce an environmentally-clean Kuwaiti production in line with global demand patterns in the markets as well as "maintaining our markets and secure new markets", noting that the completion rates in the project is 90 percent and is expected to be completed by the end of this year.

The oil minister said that Al-Zour refinery project will be completed in 2019, as nearly 45 percent has so far been achieved. On petrochemicals industry, he pointed out that Kuwait has a pioneering experience in this industry, which is receiving increasing attention in the KPC' strategy, pointing to existing projects in the field of aromatics and olefins inside and outside the country, as well as the existence of many investment opportunities under study.

He pointed out that the strategy of KPC is based on the principle of complementarity between the various activities carried out by the oil and gas industry in Kuwait, which starts from production and ends at the delivery to customers, a strategy that ensures protection against fluctuations in oil prices and maximize the added value of Kuwaiti crude oil. - KUNA