Gas

Kuwait produces a relatively modest volume of dry natural gas (around 343 billion cubic feet -- Bcf -- in 2004), the vast majority of which is "associated gas" (i.e., found and produced in conjunction with oil). Kuwait’s total gas production in 2004 was 396 Tcf. Despite reserves of only 55.5 trillion cubic feet (Tcf), Kuwait hopes to significantly increase its use of natural gas in electricity generation, water desalination, and petrochemicals to free up as much as 100,000 bbl/d of oil for export. Kuwait also hopes to reduce flaring of associated gas by tying together gathering centers.

Aside from imports, Kuwait hopes to increase its domestic natural gas production, both through reduced flaring of associated gas and through new drilling. Exploratory drilling is currently being undertaken at the Raudhatain oilfield, reaching geological formations much deeper than the oil deposits, which are believed to be rich in natural gas. In 2006, a 35-Tcf non-associated find was discovered in northern Kuwait at the free natural gas fields in Sabriya and Umm Niqa areas. It is Kuwait's first natural gas find that was not part of an oil field. Initial studies proved that 60 to 70 percent of the discovered volume can be utilized. According to KOC, the early stages of the actual gas production would start at the end of 2007 after completing the needed surface installations.

Foreign concessionaires dominated Kuwait's oil industry until 1973 when production peaked at 3.3 million bpd at low prices. By 1977 the industry was nationalized and a policy of conservation and reduced output was implemented. In 1981, production touched a low of 1.25 million bpd but rose to 2 million bpd in 1990.

During the 1970s and 1980s Kuwait moved heavily into downstream activities including local refining, transport, overseas refining, and distribution of products -- through the acquisition of foreign assets. Refining and the overseas distribution of products, besides generating higher profits, provided market protection during gluts in crude oil. Kuwait also entered the field of overseas exploration and production.

After a period of reorganization in the late 1970s and the acquisition of foreign corporations in the 1980s, Kuwait's oil industry, supervised by the Ministry of Oil, is controlled today by:

the Kuwait Petroleum Corporation (KPC) as the overall coordinating body.
Kuwait Oil Company (KOC) carries out exploration and crude production.
Kuwait National Petroleum Company (KNPC) manages refineries and domestic marketing.
Kuwait Oil Tanker Company (KOTC) undertakes transportation.
Petrochemicals Industries Company (PIC) produces petrochemicals.
Kuwait Foreign Petroleum Exploration Company (Kufpec) handles exploration of oil overseas.
Kuwait Petroleum International (KPI) manages downstream operations in Europe.
Kuwait Aviation Fuelling Company supplies fuel to aircraft that use Kuwait International Airport.
Sante Fe International Corporation provides expertise in exploration, drilling, pipelines, etc.
Sante Fe's wholly-owned subsidiary, C.F. Braun & Company, provides refinery engineering services.

The destruction of Kuwait's oil industry during the Iraqi occupation was extensive, but damage to exploitable reserves was estimated at only about 2 per cent. Several hundred oil wells and gathering stations (GSs) required replacement. All the three domestic refineries were beyond operation. By mid-1994, however, nominal production capacity of crude from Kuwait and its share of the Neutral Zone was around 2.4 million bpd, and refinery’s capacity was back to pre-invasion levels.

Today, the industry has recovered fully from the onslaught of the Iraqi invasion. The State-owned KPC is estimated to be the seventh largest oil company in the world. It has extensive overseas operations including refineries and large downstream distribution networks in western Europe. Non-Arab states, however, are Kuwait's main customers; the country exports some 78 per cent of its products to them.