Kuwait owns about 10% of oil reserves in the world, with current oil production capacity of about 3.15 million b/d (2.85 million b/d from the Kuwaiti Oil Company and the rest is about 280 thousand b/d from the Neutral Zone). Kuwait plans to increase its current production capacity to four million barrels of oil per day by 2020 through exploiting heavy oil fields, and promoting production within the neutral zone shared with Saudi Arabia. It should be noted that the productive capacity of four million b/d by 2020 will include 3.65 million b/d of the Kuwaiti Oil Company production, and the rest comes from the Neutral Zone
Sami Al-Rasheed, the Chairman and Deputed Member of Kuwait Oil Company, the governmental company responsible for exploration and production, said: “Kuwait has large production capacity surplus, and Burgan field, by its productive capacity of 1.7 million b/d which is considered the second largest oil field in the world after El Ghawar field in Saudi Arabia), preoccupies more than half of the production capacity in Kuwait; the company would raise its production capacities to more than three million b/d in 2010, and it also plans to allow oil major international companies to assist in heavy oil production and free (non-associated) natural gas extraction, which was discovered for the first time in 2006”.
As for producing heavy oil from the northern fields, the company relies mainly on its own expertise in this area. According to the statements of the Deputy accredited member Hashim Hashim of the company, the productive capacity of these fields ranges between 650 thousand and 800 thousand b/d. The company is trying to raise the heavy oil production in the northern fields to 900 thousand barrels per day by 2012.
Kuwait’s constitution, and longtime policy, bars foreign investment in the country’s natural resources, except as provided for by law. In order to allow IOC involvement, “incentives buyback contract” (IBBC) arrangements, which do not involve production sharing, concessions, or the “booking” of reserves by foreign companies, have been created. The structure of the IBBC agreements allows the Kuwaiti government to retain full ownership of oil reserves, control over oil production levels, and strategic management of the ventures. Foreign firms are to be paid a “per barrel” fee, along with allowances for capital recovery and incentive fees for increasing reserves, in their role as service contractor.
Project of Kuwait –PK – aims to increase the country’s oil production capacity from four northern oil fields – Raudhatain, Sabriya, Ratqa, and Abdali – to 3.5 million bbl/d by 2015, and then 4 million bbl/d by 2020 with the help of international oil companies (IOC).
Heavy oil is a major component of Kuwait’s increased production capacity plans. Estimated heavy oil reserves of approximately 13 billion bbl are located primarily in the north of Kuwait. KOC also plans to drill for oil in South East Kuwait and West Kuwait. In South East Kuwait, which holds the vast Burgan field, production is to increase by 200,000 b/d to a total of 1.7 million bbl/d; KOC hopes to maintain capacity in West Kuwait at 500,000 b/d.