KUWAIT CITY: Kuwait may delay some planned investments in the oil sector in light of the sharp drop in crude prices but will keep the main plans intact, Oil Minister Mohammad Al-Olaim said yesteday.
“We are in the process of assessing our (long-term) plan ... there could be some rescheduling of certain projects ... but we will keep the (main) goals,” the minister told a press conference.
Kuwait said at the start of the year that it had earmarked $55 billion for investment over the next five years in the energy sector, including raising production capacity and building a new refinery.
“The five-year plan for the (Kuwait Petroleum) Corporation is flexible but there will be no change to essential projects,” the minister said. “Our plan for output capacity increases is still valid.” Based on the plan, the Gulf state aims to raise its crude output capacity to four million barrels per day (bpd) by 2020 from 2.7 million bpd currently.
The plan is behind schedule as capacity should have been raised to three million bpd in 2008 and to 3.5 million bpd in 2010.
Benchmark international crude oil prices were between $40 and $45 a barrel on Friday, less than a third of their peaks above $147 reached in July.
The emirate said last month it was reconsidering the country’s five-year national plan, in order to cut spending due to the sharp fall in the price of oil, which contributes 95 percent of public revenues.
The plan initially envisaged spending $130 billion on infrastructure projects over the next five years, starting next year.
In another development, the Kuwait government yesterday refused to scrap a venture with US giant Dow Chemical though opposition lawmakers say the country is overpaying by agreeing to invest $7.5 billion in the mega project.
“The deal has passed through proper channels after thorough studies ... We are going ahead with the deal based on the signed agreement,” Oil Minister Mohammad Al-Olaim told a press conference.
The opposition Popular Action Bloc warned on Sunday that it will quiz the prime minister in Parliament unless the government cancels the deal, saying its value was exaggerated and involves squandering of public funds.
More lawmakers joined in criticizing the deal yesterday, urging the government to withdraw its partnership.
Under the agreement, signed last month, state-owned Petrochemicals Industries Co. (PIC), will pay $7.5 billion for a stake in a new company called K-Dow Petrochemicals, to be equally owned by PIC and Dow Chemical.
Dow Chemical’s contribution is in the form of assets including plants and research centers in several countries and Kuwaiti lawmakers allege the value of these has plummeted due to the global financial crisis.