CERAWeek 2014 - Keynote Address - Session Report

IHS Vice Chairman Daniel Yergin introduced the Tuesday afternoon keynote speaker, Nizar Al-Adsani, Chairman and Managing Director, Kuwait Petroleum Corporation (KPC). Mr. Al-Adsani expressed gratitude for the opportunity to speak about the future of oil and gas in the state of Kuwait. He noted that KPC has been increasing its productive capacity and plans to continue being a reliable oil supplier to the country and the world. KPC's growth vision includes increasing its production capacity from the current 3.3 million barrels per day (mbd) to 3.5 mbd in 2015 and to 4 mbd by 2020. Although expansion to 5 mbd is possible, KPC opted to limit its productive capacity to 4 mbd in order to sustain production beyond 2030.

KPC also plans to develop heavy crude reserves and increase production of nonassociated gas. Both initiatives require new skills and investments. Heavy oil extraction is new in Kuwait, and the country's nonassociated gas reserves have a high sulfur content and require processing. So Mr. Al-Adsani emphasized the need to partner with international oil companies and to attract the best skills and technology available in the world. In particular, Mr. Al-Adsani noted that enhanced recovery techniques have already allowed KPC to increase its output capacity, and he stressed that new technologies have substantially reduced the water-cut percentage in oil recovery. He noted that half of the new productive capacity by 2020 will come from more challenging fields, so advanced technologies and skills are of vital importance. Mr. Al-Adsani concluded his prepared remarks by reminding the audience that Kuwait is abundant in energy resources and said he is confident that KPC will help the world meet its energy demand.

In the question and answer session, Mr. Al-Adsani shared KPC's international strategy and goals in more detail. The company now works in 14 countries around the world and is pursuing further opportunities in the upstream and downstream. For example, in the upstream KPC partnered with Chevron in the Wheatstone natural gas project in Australia. KPC has made several acquisitions lately in the North Sea and in the South China Sea. In the downstream sector, KPC operates three domestic refineries and is building a fourth one for urgent power requirements, For power generation, Kuwait needs more gas. Kuwait imports liquefied natural gas (LNG) from Qatar, Indonesia and other suppliers. Mr. Al-Adsani said that Kuwait stopped considering nuclear energy after the Fukushima incident but that solar projects are being considered, albeit slowly, because the mindset about electric power use and prices needs to change, as power prices are very low.

Mr. Al-Adsani reassured the audience that today, more than 25 years after the 1991 invasion by Iraq, Kuwait's oil sector is back to completely normal operations. As for the challenges in Kuwait's oil sector, Mr. Al-Adsani said that getting long-term commitments is an issue, as exploration and production developments are long-term endeavors.

Mr. Al-Adsani highlighted four top priorities for his company: operational safety, personnel development, output optimization, and research and development. He stressed personnel development as a high priority and noted that exposure to international experience is a crucial part of that development.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.