Record exports to Asia with new Kuwait oil refinery

Kuwait National Petroleum Company (KNPC) is looking set for a year of investment, with a new oil refinery pushing exports to Asia up to their highest levels ever.

As well as a new oil refinery, the national company is looking to innovative techniques to extract huge reserves of heavy oil and also invest in clean fuel projects. All in all, 2012 looks set to be one of the biggest years yet for KNPC in terms of investment.

The first plans have recently been announced by KNPC, who said they will be launching tenders in the coming weeks for a new $14.5bn refinery at Al Zour. The new plant is expected to reach high levels of output, which is hoped will boost export demand from Asia. Proposals for the plant say that there will be an initial capacity of 615,000 barrels per day (bpd) after the plant is completed in 2017, which will increase national production to 4m bpd by 2020.

A clean fuel project will also be getting underway in the next few months, which encompasses an $18bn upgrade of two existing refineries that will increase their capacity and enable them to produce lighter grade fuel.

Hani Hussein, the minister of oil, said that he expects between seven and nine companies to make tender offers for Kuwait’s refinery projects by the end of May. He added that the country shouldn’t be reliant on a high oil price, but also said $100 per barrel is “fair”, given the fundamentals of supply and demand.

Exports to China have been increasing exponentially year on year to its current levels of 1.3 tonnes in April, equivalent to 308,000 bpd, and exports to Japan have seen a similar increase. Added to this, Petronas, the Malaysian state-run oil firm, has halted imports of Iranian crude in March, listing Kuwait as a potential alternative.

Posted by Lauren Steadman