KUWAIT: OPEC member Kuwait plans to spend more than half a trillion dollars by 2040 to boost its oil and gas output and refining capacity, a top executive said yesterday. The announcement of the huge investments comes despite Kuwait projecting a budget deficit in the next fiscal year for the fourth year in a row due to low global oil prices.

The chief executive officer of state-run Kuwait Petroleum Corp (KPC) Nizar Al-Adasani said the firm plans to carry out a number of major projects to boost oil production to 4.75 million barrels per day by 2040. "To achieve these targets, KPC plans to spend $114 billion in capital expenditure over the next five years and an additional $394 billion beyond that to 2040," Adasani told the Energy Strategy Forum in Kuwait City. "KPC has launched the 2040 strategy which focuses on growth in all its activities that require significant funds to finance the mega projects," he said.

Adsani noted that the energy industry faces complex and diverse challenges, but dealing with it professionally focuses on the strategy of investment, innovation and cooperation. "KPC is working with fast-changing variables and challenges locally and internationally, and we continue to focus on strategies that will transform Kuwait into a better position to deal with future challenges," he said. The forum brought together an international audience, attracting over 200 delegates from 20 countries including the United Kingdom, Japan and the United States.

Kuwait currently has a crude production capacity of around 3.1 million bpd, excluding some 250,000 bpd from the neutral zone with Saudi Arabia which has remained shut since Oct 2014. It plans to raise its output capacity to four million bpd by 2020. Adasani said the firm also plans to raise free natural gas production to 2.5 billion cubic feet a day by 2040 from just 200 million cubic feet a day currently. Free gas production will reach half a billion cubic feet in April and one billion cubic feet in 2023, he said.

Kuwait also produces about 1.2 billion cubic feet a day of associated gas, which is produced along with crude oil. The state plans to raise its refining capacity to two million bpd by 2035 from less than 800,000 bpd now, Adasani said. Around 90 percent of Kuwait's state revenues come from oil. Kuwait amassed around $600 billion in surpluses in the 16 years till 2014, when world prices were high.

For supplier nations, the new energy market poses significant challenges and opportunities, while oil and energy companies continue to consider changes in their business models and strategies for development. One of the key areas of discussion at the event was what to expect from the oil market in 2018. Will production cuts last and if so, will they balance the market; the Russian-Saudi cooperation; what to expect from shale and non-OPEC producers, plus other critical issues for the market. Also discussed was how to finance energy in a shifting market and longer-term investment strategies.

By Faten Omar