Kuwait is pumping crude at a daily rate of 2.8 million barrels, the most since December 2016, the country’s oil minister Bakheet al-Rashidi said today as quoted by S&P Platts. This is 90,000 bpd more than Kuwait’s June daily production and the figure highlights the difficulties the cartel faces in boosting production quickly enough to rein in prices: OPEC’s total, as estimated by analysts, only rose by 70,000 bpd in July.
As OPEC ramps up production in response to vocal disgruntlement with oil prices, Kuwait and Saudi Arabia are preparing to restart production in the Neutral Zone, which could bring another half a million barrels daily to global supply. The restart will likely take place no sooner than December.
Separately, the minister said that the oil market is approaching stability. This is something the market was supposed to have done earlier this year, before it turned out those price levels were not exactly optimal for buyers.
Now, things have changed. “It is clear today based on the current level of production that we are approaching a very stable stage ... whether for the consumers or the producers,” Al-Rashidi said, as quoted by Reuters.
Kuwait is not stopping at current production rates, either. The foreign-investment division of the country’s state-owned oil company, Kufpec, has borrowed US$1.1 billion to develop shale oil resources abroad, notably in Canada.
Kufpec’s current daily production stands at 100,000 barrels of oil equivalent, but the company aims to raise this to 119,000 in September and further to 150,000 bpd in 2020. In Canada, Kufpec pumps just 8,000 barrels of oil equivalent daily but plans to expand this significantly after the drilling of 2,000 more wells in the Alberta shale patch.
Kuwait’s total production capacity currently stands at 3.15 million barrels of crude from wholly owned fields, but plans are to boost this to 4 million bpd by 2020 and 4.75 million bpd by 2040.
By Irina Slav for Oilprice.com
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Until President Trump requested Saudi Arabia to increase its oil production, nobody not even the Saudi oi minister Mr Khalid and al-Falih or the Kuwaiti oil minister Mr Bakheet al-Rashidi ever talked about a supply gap in the global oil market. They were talking about extending the production cut agreement beyond 2018.
Now the Kuwait oil minister is saying that the market is approaching stability. How could the market be stabilizing when oil prices are hovering around $72-$75 a barrel when the majority of OPEC members need an oil price between $80-$100 to balance their budgets. Some OPEC members led by Saudi Arabia must have a short memory. They have already forgotten the huge damage inflicted on their economies as a result of the oil price crash in 2014.
The global oil market has not re-balanced completely. There is still a bit of glut capable of taking care of outages in Venezuela, Nigeria and Libya.
They rushed to increase production against their own national interests just to please President Trump whose drive for lower oil prices is not motivated by his concern about the global economy but by fear of his Republican party losing the midterm congressional elections in November because of high oil prices offsetting his tax cuts.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London