New Energy research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 08/12/2013 --We expect Kuwait to enjoy steady gains in oil production over the course of our forecast period, with upside potential from plans to tap increasingly difficult and complex deposits of both oil and gas. However, given the challenges, we note that Kuwait will need foreign expertise - a prospect threatened by ongoing difficulties in the businesses environment. While we expect Kuwait to reach its targeted oil output of 3.6mn barrels per day - albeit two years later than planned in 2022 - we believe the country will remain a net importer of gas as demand continues to rise. Although downstream projects have advanced, long delays and an uncertain outlook suggest further downside risk despite recent progress.

We highlight the following trends and developments in Kuwait's oil and gas sector:

- BMI forecasts Kuwaiti oil production to rise from an estimated 2.8mn barrels per day (b/d) in 2012 to 2.9mn b/d in 2013. We see gas production rising from an estimated 13.8bcm in 2013, to 15.3bcm in 2013.
- Kuwait is reportedly exploring its unconventional potential with plans for up to 1,000 wells over the coming years to deliver 60,000b/d in heavy oil by 2015. Shale oil and gas are also being targeted, with Kuwait hoping that shale gas could deliver 1.5-3bcm in sorely needed gas supplies. Increasingly difficult to tap gas reserves are being targeted, with development of high-sulphur, high-pressure gas reserves aimed at tripling production capacity by 2030 - a date outside our current forecast period.
- Given the poor quality of Kuwait's non-associated gas reserves, foreign expertise will be necessary to boost domestic production and ease the import burden. However, the country's business environment remains an obstacle, underscored by a recent international arbitration ruling which fined Kuwait Petroleum Corporation US$2.19 after the failure of a joint venture with Dow Petrochemicals. In the wake of the ruling, much of the senior leadership of Kuwait's state-owned oil and gas firms was dismissed. According to some sources, key projects including the long-delayed greenfield Al-Zour refinery - to be the world's largest upon completion - were not at risk of further delay or cancellation.
- Indeed, the outlook for Kuwait's downstream sector remains uncertain, after multiple years of delays to the Al-Zour facility and Clean Fuels Project. Although the recent awarding of project management contracts and regulatory approvals indicate the projects may be advancing, we remain cautiously optimistic regarding their progression.

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