Dubai — State-owned Kuwait Oil Company plans to start producing heavy oil in February 2020 amid plans to boost total oil production capacity to 3.2 million b/d within five years, the company CEO told S&P Global Platts.
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KOC, which currently pumps all of Kuwait's estimated 2.7 million b/d production, will start next year pumping heavy oil in South Ratqa, KOC CEO Emad Sultan said in written reply to questions.
The country's Kuwait Export Crude -- a light grade with a gravity of 31 API -- was the only grade for export until last year, when it started the Super Light crude with a gravity of 48 API and sulfur content of 0.4%.
According to a 2017 KOC online presentation, South Ratqa oil gravity is expected to be 10-18 API with 5% sulfur content.
The heavy crude from South Ratqa will be fed into the new 615,000 b/d Al-Zour refinery, where it will be processed into low-sulfur fuel oil to be used for power generation, Sultan added.
"An extensive number of wells to develop heavy oil were drilled in previous years in South Ratqa, and we expect to turn over a new Central Production Facility to handle heavy oil production by February 2020," Sultan said.
"The commissioning of this new facility will add 60,000 barrels of heavy oil per day to the KOC production mix, reaching a total of 75,000 b/d of heavy oil production," he added, without giving a specific timeline.
Kuwait, OPEC's fourth largest oil producer with an output of around 2.7 million b/d, has revised over the years its plans to boost its oil production capacity, which initially was set to reach 4 million b/d by 2020.
The latest figures from Kuwait indicate the country plans to reach a production capacity of 4.75 million b/d by 2040. Kuwait has not published an updated figure for its current oil production capacity and KOC did not divulge its current oil production capacity.
Political debate between the country's parliament and government over projects has long delayed energy targets, particularly as the Gulf country has had several oil ministers replaced over the past years amid several parliamentary elections and government reshuffle.
The $10 billion Al-Zour refinery is due to come online next year after several years of delays due to parliament inquires.
Kuwait also recently restarted talks with neighboring Saudi Arabia to start pumping again from the neutral zone, where production of some 500,000 b/d has been shut since 2015 due to differences between the two countries. Both countries equally share production from the zone.
Iraq, which invaded Kuwait in 1990 leaving several oil wells burning, has agreed with Kuwait after years of negotiations to start producing from shared fields and appointed ERC Equipoise Pte., a UK-based consultancy, to study the development of border fields.
The Gulf country is pumping in line with its 2.7 million b/d quota under the OPEC/non-OPEC agreement to trim a total of 1.2 million b/d of output to help prop up prices and balance a market awash with US shale oil.
EXPLORATION PICKING UP
KOC, which is a unit of Kuwait Petroleum Corp, is planning to spend $8.9 billion in capital expenditure this year, with a total of $50 billion planned for the upcoming five years to help meet its energy targets.
"KOC capital expenditures allocated for exploratory activities account for approximately 9% to 10% of total expenditures," Sultan said. "We can conclude saying that our investment portfolio is well-balanced between the exploratory and the oil and gas production development activities," he added.
KOC is beefing up its exploratory activity and awarded Halliburton in July a three-year contract that will start in mid-2020 to look for offshore oil and gas in the Persian Gulf.
According to BP's Statistical Review of World Energy 2019, Kuwait holds 101.5 billion barrels of oil in proved oil reserves, which represents 5.9% of the world's total at the end of 2018. However, the country is gas-starved and its proved gas reserves stood at 59.9 Tcf, or 0.9% of the world's total.
"The contract recently awarded to Halliburton is a significant achievement for KOC as it represents the start of the exploration and development activities in offshore Kuwait," Sultan said.
"We have high expectations of successful results from these exploratory activities, and the further offshore development could add important volumes to boost KOC oil production," he added.
-- Dania Saadi, dania.el.saadi@spglobal
-- Edited by Kshitiz Goliya, email@example.com