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Waiting for project Kuwait: Jon Gorvett reports from Kuwait where to increase oil output foreign help may be needed. Not everyone is keen on reopening national interests to outsiders.

The Middle East

| July 01, 2006 | Gorvett, Jon | COPYRIGHT 2006 IC Publications Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

WITH A QUARTER of the world's known oil reserves and a string of colossal budget surpluses in recent years, Kuwait is fast regaining its traditional role as a powerhouse of the Gulf--and global--economy.

The country is blessed with one of the world's largest oilfields, the onshore Grand Burgan. This is also one of the easiest energy reserves to tap anywhere in the Gulf.

Located southeast of the capital, Kuwait City, the oil of the Burgan still has enough pressure to bubble straight up to the surface unaided, around 100m above sea level. Collected at the wellheads, it then simply rolls downhill to the coast through pipelines, with gravity doing most of the work. Yet this great natural resource cannot go on like this forever. Increasingly, the question of what happens when the oil no longer almost barrels itself has become a subject of intense debate amongst Kuwaitis.

This debate intensified last November, when the chairman of the Kuwait Oil Company (KOC), Farouk Al Zanki, announced that Burgan's production levels were in decline. He said that although attempts had been made to maintain production at 1.9m barrels per day (b/d), 1.7m b/d was now the optimum rate. This was also lower than the 2m b/d that had long been set as the field's production rate for the rest of its 30-40 year expected lifespan.

The International Energy Agency has an even lower estimation. Its most recent report says output from the Greater Burgan area will be 1.64m b/d by 2020 and 1.53m b/d by 2030.

This is particularly disturbing, as Kuwait has also announced major plans to try and boost its total output from 2.6m b/d at present to 4m b/d by 2020. This is in response to the growth in global demand for oil, which is expected to keep rising as China and India develop. Burgan, however, may have already peaked.

The response of some to this concern has been to revive a longstanding, yet controversial idea. Turning to four underdeveloped fields near the Iraqi border north of the capital, some have suggested that extracting more of the difficult oil from these would be the solution. To do this, they also argue, international oil companies (IOCs) should be brought back in--a suggestion that has sparked fierce public debate.

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