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Kuwait energy sector in peril

Kuwait City, December 17, 2008

Kuwait's oil industry is in peril due to political bickering and interference that have stalled mega projects.

Three major projects costing some $40 billion have been put on hold because of stiff opposition from parliament, while the emirate's plans to raise oil output capacity is way behind schedule.

'The oil sector is in a real crisis as plans and strategies have been frozen ... The vital sector has been plunged into political dispute,' said a number of senior officials in the sector.

'We believe that matters have deteriorated to a perilous level ... External interference in the oil sector's strategic decisions has reached a dangerous level,' they said.

Earlier this year, Opec's fourth largest producer said it earmarked about $55bn for oil projects over five years including a new huge refinery, upgrading existing refineries and other crude facilities.

A project seeking the assistance of foreign oil majors to almost double output from Kuwait's northern oilfields to 900,000 barrels per day, first proposed in mid-1990s, is still on the backburner.

After awarding contracts to five international companies in May and later signing memoranda of understanding to build a $15bn oil refinery, the project looks in serious doubt after MPs cited faulty procedures.

Oil Minister Mohammad Al Olaim acknowledged 'differences of opinion between the ministry and the audit bureau,' adding that the ministry has sent its response to the council of ministers for a final decision.

A $15bn project to upgrade two of three existing refineries was due for launch in August, but so far tender papers have not been issued as officials await the verdict on the new refinery project.




Tags: Energy | Kuwait | Crude | oil industry | fuel |

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