Kuwait is largely reliant on oil for exports, government revenue and GDP contribution. The country is therefore particularly sensitive to fluctuating global hydrocarbons prices and the long-term financial risks associated with the global shift towards lower-carbon sources of energy. Transitioning towards a more diversified and sustainable energy mix is an ongoing challenge for the country, as for much of the region, in light of the industry’s long-standing history and key contributions to the economy.

A raft of ongoing energy projects seeks to promote progress towards Kuwait’s goal of enhanced in-country value addition, as well as economic diversification and resilience to turbulent hydrocarbons prices, while aligning the country with the international sustainability agenda. Increasing non-associated gas production, heavy oil production and crude oil processing are particularly compelling opportunities to meet Kuwait’s energy needs and align the country’s development with long-term goals.


The Supreme Petroleum Council (SPC) is responsible for Kuwait’s oil and gas policy. The council is led by the prime minister, with members appointed by the emir. Since a 2013 reorganisation, membership comprises six ministers, including the minister of oil; six representatives from the private sector; the head of the Central Bank of Kuwait; and the head of the national oil company, the Kuwait Petroleum Corporation (KPC). KPC was formed in January 1980 as an umbrella company five years after the country nationalised the sector. The shares of its subsidiaries were transferred to the new government-owned corporation to form one integrated oil industry. KPC is tasked with the promotion of Kuwaiti petroleum exploration, production, petrochemicals, refining, marketing and transportation.


In early 2020 the SPC approved a restructuring of KPC and the formulation of new production targets after project delays contributed to an inability to meet a long-standing production target – namely, 4m barrels per day (bpd) of crude capacity by the end of 2020. Phase one of the KPC restructuring is set to reduce the country’s eight operating oil firms to three via a series of mergers, and phase two will see the government parent company convert into a commercial entity, with global strategy consulting business Strategy& appointed to advise on the process. Originally planned to begin in early 2021, implementation has been delayed until the first quarter of 2023 amid global headwinds, fluctuating oil prices and the general election held in September 2022. The restructuring seeks to enhance efficiency by streamlining decision-making and minimising duplication in operations, thereby helping to lower the demand for public financing.


Long-term Development

Prior to news of its restructuring KPC was working to implement a strategic plan for 2040. Of a provisional total allocation of $508bn for 2018-40, 75% was allocated to domestic upstream projects; 9% to domestic downstream operations; 6% to petrochemicals; 5% for the international upstream; 4% for the international downstream; and 1% to midstream operations. Aligned with the New Kuwait 2035 vision, the objectives of the industry’s provisional 2040 plan included increasing the role of the private sector participants.

Private Players

While Kuwait’s oil and gas sector is also home to non-government owned companies, their operations are largely outside of the country. For instance, Kuwait Energy is a subsidiary of Hong Kong-listed United Energy Group, which maintains exploration, development and production assets in Iraq, Egypt, Oman and Yemen. Energy House Holding is an arm of Kuwait Finance House with assets in the Cayman Islands, Sudan and the UAE. Meanwhile, the Independent Petroleum Group has interests in marketing and trading crude oil, petroleum products, liquefied petroleum gas, petrochemicals, and fertilisers trading and marketing. The Kuwait-headquartered company operates through associate companies in 11 markets – including the UAE, where it also maintains a subsidiary – and a joint venture in Lebanon.

Size & Performance

The extraction, refining and sale of oil accounts for over 90% of Kuwait’s exports and government export revenue. In 2020-21 oil and gas contributed an estimated KD8.8bn ($29bn) worth of exports, according to the most recent data from the IMF. The latest available projections from the international organisation, released in March 2022, forecast that this contribution would rebound to KD15.5 ($51bn) in 2021-22 and KD19.7bn ($64.8bn) in 2022-23, close to pre-Covid-19 pandemic levels.

In terms of contribution to government revenue, the sector accounted for an estimated 25.4% of GDP in 2020-21, according to the IMF. The multilateral institution expects the contribution to recover to 36% in 2021-22, a similar rebound to levels seen before the pandemic. Kuwait’s economic reliance on oil makes the country particularly sensitive to the impact of fluctuating hydrocarbons prices. The country is also susceptible to the long-term financial risks associated with the global transition towards renewable sources of energy. The public sector’s commitment to diversifying Kuwait’s energy and economic mix is highlighted in the country’s long-term development roadmaps, which include the New Kuwait 2035 and the Kuwait Master Plan 2040.

Oil Output & Exports

Kuwait is among the top-10 oil producers by volume. In 2021 Kuwait produced 2.7m bpd of oil, according to the “BP Statistical Review of World Energy 2022” report, marking a 7.9% decline from 2019 figures. The country consumed around 16.3% of its production values that year, or 450,000 bpd. This underlines the pivotal role of crude oil exports. Asia accounts for the majority of exports: each year during 2018-20, the most recent period for which data is available, China accounted for the lion’s share of Kuwait’s crude petroleum exports by value at $7.9bn; South Korea accounted for Kuwait’s second-largest crude petroleum exports destination at $4.7bn; and Japan placed third at $3.4bn.

Kuwait has a mix of light and heavy oils. For 72 years these were blended into a single Kuwait Export Crude product, with an American Petroleum Institute (API) gravity of 31 – an indication of its weight compared to water – and a sulphur content of 2.5% as of 2018. That year the country commercialised a second export grade: super light crude, with an API gravity of 48 and sulphur content of 0.4%. The lighter crude offers a premium of $5-6 per barrel and is primarily sourced from the Jurassic gas fields in the north.


Kuwait ranks among the global top-10 in terms of proven oil reserves, with 101.5bn barrels in 2021, according to data from the Organisation of the Petroleum Exporting Countries (OPEC). In its annual report for the fiscal year ending March 2021 the Kuwait Oil Company (KOC) – of which KPC is the parent company – reported that its crude production capacity decreased by some 18% since 2018, to below 2.6m bpd. While this marked the third consecutive annual decline in crude capacity, in October 2021 Hashem Hashem, then the CEO of KPC, told local press that the company’s capacity is set to increase by up to 500,000 bpd within two years. Developments supporting this goal include a possible 350,000 bpd from Kuwait’s share of production from the Partitioned Neutral Zone (PNZ) – a 5770 sq-km area located on the border with Saudi Arabia – where the two countries share energy resources.

Production Cuts

A Kuwaiti was appointed as secretary general of OPEC for the first time in August 2022, underscoring the country’s standing in the group. The country participates in coordinated production cuts to stabilise global prices and supports efforts for a long-term cooperation agreement between OPEC and major non-member producers, reaffirming the country’s commitment to the OPEC+ Declaration of Cooperation in November 2021.

In September 2022 OPEC+ agreed to reduce production by 2m bpd effective from November. The move came amid an uncertain global economic environment and oil market outlook, as well as declining international oil prices compared to the first half of the year. While countries such as the US were concerned about the impact the move would have on the global economy, the cut equated to only some 2% of worldwide demand. It was substantially smaller than the body’s largest reduction of 9.7m bpd announced in April 2020 as the pandemic emerged and caused a significant decline in demand for oil.

Gas Balance

The country’s natural gas utilisation rates have risen considerably in recent years. Consumption volume of 25.1bn cu metres in 2021 marked an increase of almost one-quarter compared to 2015 figures and a 7.7% rise since 2019. The feedstock is increasingly used for power generation and water desalination. This aligns with the government’s longterm objective to use natural gas for domestic power and desalination needs, thereby freeing up oil for exports. Furthermore, the shift towards natural gas is aligned with the Kuwait National Adaptation Plan 2019-30, which seeks to unlock economic growth through low-carbon development.

Kuwait’s natural gas production volume, meanwhile, falls short of its consumption. The country produced 17.4bn cu metres of natural gas in 2021, or a shortfall of 7.7bn cu metres, according to the 2022 BP report. The country makes up for the remainder with liquefied natural gas (LNG) imports, importing 7.7bn cu metres of LNG in 2021. The installation of an LNG import terminal at the new Al Zour facility indicates the long-term role this fuel is expected to play in Kuwait’s energy future. The terminal began receiving LNG deliveries from Qatar in 2022 under a 15-year agreement between KPC and Qatar Petroleum, with Qatar to supply up to 3m tonnes of LNG per year.

Upstream & Onshore

Kuwait’s Greater Burgan oil field comprises the eponymous Burgan field, and the smaller Magwa and Ahmadi fields. The Greater Burgan field in the south of the country is widely considered the world’s second-largest oil field, behind Saudi Arabia’s Ghawar. The field’s maximum production volumes equate to around half of the national capacity. Other important fields are Ratqa in the north-west, adjacent Mutriba and Ladira; Umm Gudair, close to Burgan; and Wafra in the PNZ. Additional fields in the northern part of the country include Abdali, Bahra, Raudhatain, Sabriyah and Umm Niqa. The centre of the country hosts Kra Al Maru.

Recovery Technologies

KOC has been working to implement enhanced oil recovery (EOR) technologies in fields across the country. These costly technologies are important to harness the full potential of Kuwait’s ageing oil fields – many of which have decline rates of 5-8%. High volumes of sour and heavy oil are also challenges for EOR. In facing these obstacles, Kuwait has become a leader in increasing production at mature formations: KOC inaugurated the Middle East’s first chemical surfactant injection project in its northern fields in 2017. Also in the north of the country and operated by KOC, the Ratqa field constitutes the first project to develop heavy oil and is one of the region’s largest upstream initiatives. Ratqa’s Lower Fars Heavy Oil Project has a production target of 430,000 bpd by 2040. Upon completion, crude will be extracted from over 1500 different wells. Cyclic steam injection is used to extract the heavy oil, thinning it for transportation by pipeline to Mina Al Ahmadi and then onwards to Al Zour. Production began in February 2020 at a rate of 11,000 bpd, and capacity rose to 38,000 bpd the following month. The first heavy oil shipment from the field to global markets included 500,000 barrels in May 2020.


While almost all of Kuwait’s current crude oil production is sourced onshore, efforts are ongoing to increase offshore activity. The PNZ is home to four major offshore oil fields: Dorra, Hout, Khafji and Lulu. In 2020 the Khafji field resumed production after stoppage began in 2014. In 2022, with a view to developing Dorra, Kuwait and Saudi Arabia invited Iran to discuss the maritime boundary of the PNZ zone. The parties seek to employ environmentally sustainable methods and modern technology as the region moves towards lower-carbon sources of energy. The field could produce up to 1bn standard cu feet per day (scfd) of natural gas, as well as 84,000 bpd of condensate, according to regional media. Meanwhile, the country’s first offshore exploration drilling platform arrived in Kuwaiti waters in the north-east in mid-2022. Halliburton International is set to drill six exploration wells through two marine drilling towers during the first, three-year phase of the project.

Jurassic Gas

Kuwait has taken steps to leverage new tight gas fields in the north via the North Kuwait Jurassic Gas Project. Operational since 2018, Jurassic Production Facility (JPF) 1 includes an oil processing facility and a gas processing facility, with respective capacities of 40,000 bpd and 120m scfd. JFP-2 included the installation of a sulphur recovery unit. JFP-2 raised the facility’s oil processing capacity by one-quarter and almost doubled gas processing capacity. As of November 2021 Jurassic production facilities were contributing around one-tenth of national daily natural gas output.

JPF-3 modernisation and expansion was completed in August 2022 after being fully commissioned in January 2021 with a $377m contract awarded to local firm SPETCO International. More recently, in late 2021 contracts were awarded for JPF-4, to SPETCO; and for JPF-5 to China’s Jereh Group and local partner the National Alliances For Projects Company. With a 780-day timeframe for execution, these facilities will have a 50,000-bpd capacity for treated sweet crude, with API gravity of 40-50, and capacity for 150m scfd of sweet and dehydrated rich gas. These will be the final two facilities constructed at the fields, with JPF-6 and JPF-7 removed from the pipeline amid efforts to lower spending in mid-2021. Peak activity is expected in 2023, with forecasted peak production of 271,000 bpd of crude oil and condensate, and 902m scfd of natural gas. There are also natural gas deposits at the Minagish oilfield west of Burgan, and the northern fields of Raudhatain, Sabriyah and Umm Niqa.

Midstream Infrastructure

KOC has engaged in gathering centre (GC) replacement, upgrade and expansion initiatives since the country’s GC network was impacted during the 1990-91 Gulf War. The construction of the latest GC, number 32, was completed by China’s Sinopec in 2022. This helped produce the first sour crude GC at Burgan, offering 120,000 bpd capacity at a cost of $1.5bn. GCs 33-35 are expected for completion by end-2025.

The major distribution and transportation infrastructure required for Kuwait to capitalise on its upstream potential and leverage its downstream developments is setting the midstream agenda. Recent developments include the 145-km Strategic Gas Export Pipeline project. Slated for completion at end-2022, the line connects fields in northern Kuwait to a central mixing manifold at the Mina Al Ahmadi refinery – which is also where compressed gas and condensate are transported for conversion to liquefied petroleum gas. Also expected for end-2022 completion is a 450-km pipeline for crude transit linking south Kuwait to the refinery and petrochemicals complex at Al Zour. In March 2022 the Kuwait National Petroleum Company (KNPC) – which operates the refinery and petrochemicals facilities in Mina Abdullah and Mina Al Ahmadi – inaugurated its fifth LNG line. The line at Mina Al Ahmadi Refinery enabled a 30% uptick in LNG production capacity, adding around 805m scfd of gas and 106,000 barrels of condensate. The total capacity for the five lines is 3.1bn scfd and 332,000 barrels of condensates.

Downstream Opportunity

Midstream developments are helping to transform the downstream segment as Kuwait attempts to increase value added from its hydrocarbons reserves and accelerate economic diversification. Indeed, Kuwait’s oil refinery throughput in 2021 totalled 643,000 bpd – equal to 23.5% of production volume, demonstrating that the overwhelming majority of Kuwaiti crude is exported unrefined. Raising the volume that is refined domestically, or by Kuwaiti refinery projects overseas, is a noteworthy opportunity to strengthen value addition for Kuwait. Additional refinery capacity can also help expand industrial output and reduce the reliance on imports for petrochemicals products such as automotive and industrial oil-based lubricants.

Clean Fuels

In September 2021 KNPC’s $16bn Clean Fuels Project (CFP) commenced full operations, after six years of development (see Industry analysis). The project integrated the Mina Abdullah refinery, 60 km south of Kuwaiti City, with the Mina Al Ahmadi refinery, 45 km south of the capital – while also enhancing operational reliability, safety and efficiency. The integration raised the refineries’ combined crude processing capacity from 736,000 bpd to 800,000 bpd. Presenting an opportunity to export increased volumes of refined crude, the CFP’s internal rate of return is expected to be 11.5%. A total of 4045 pieces of new equipment were installed as part of the CFP upgrade and expansion. Sixteen new units, including ones for sulphur recovery, gas oil desulphurisation and atmospheric residue desulphurisation, as well as the renovation of existing facilities, were added to the Mina Al Ahmadi refinery. Mina Abdullah gained 33 new units, including the country’s largest hydrocracking unit, with a capacity of 454,000 bpd – including 70,000 bpd of low-sulphur diesel and high-quality kerosene.

These upgrades reduced the sulphur content in petroleum products, from 500 parts per million (ppm) to 10 ppm; gasoil, from 5000 ppm to 10 ppm; and ship fuel oil, to 0.5%. This aligns products with standards in Asia, Europe and the US – and a 2020 requirement from the International Maritime Organisation – while also lowering the cost of refining. There is optimism that these improvements will widen access to new markets, increase revenue and create more jobs for Kuwaitis – accelerating progress towards New Kuwait 2035. Indeed, by mid-2022 the project had created approximately 800 jobs for Kuwaiti nationals, and training courses for around 650 recruits, according to KNPC. Meanwhile, contractors had spent some KD1.1bn ($3.6bn) in the domestic market during the execution phases, according to the company.

Al Zour

In early November 2022 the first phase of the 615,000 bpd Al Zour complex in the south of Kuwait commenced commercial operations. The $25bn facility is designed to process heavy crude, with a refinery, petrochemicals plant and LNG facility. The $3bn LNG processing facility was financed by Japan’s Sumitomo Mitsui Banking, and built by two Korean companies – Hyundai Engineering & Construction and Korea Gas. The refinery is being built by a consortium led by the US-headquartered Fluor, along with Korea’s Daewoo Engineering & Construction and Hyundai Heavy Industries – the same consortium that worked on part of the Mina Abdullah package.

Combined with the CFP, the refinery will raise Kuwait’s total refining capacity from 800,000 bpd to 1.4m bpd. Towards the end of November 2022 the refinery sold its first fuel oil cargo via a tender to BP for 100,000 tonnes of low-sulphur fuel oil. The refinery is expected to reach full capacity in 2023. The complex’s integrated petrochemicals plant will use feedstock from the refinery. The engineering, procurement and construction of the petrochemicals plant are scheduled for completion towards end-2023, with operations to start in early 2024.

Energy Mix

Natural gas is growing its share in the country’s energy mix amid ongoing diversification efforts. As of 2021 gas accounted for 51.9% of energy consumption in Kuwait, compared to oil’s 47.9%, according to Our World in Data. Kuwait’s natural gas production is expected to grow by 57% from 17.4bn cu metres in 2017 to 27.3bn cu metres in 2035, according to the 2019 Kuwait Energy Outlook published by the UN Development Programme. Solar, meanwhile, accounted for 0.03% and wind less than 0.01% of the energy mix in 2021. This highlights the opportunity for renewables in the country, thanks to the country’s sunny, desert climate.

Renewable Vision

New Kuwait 2035 aims to grow the contribution of renewables to the energy mix considerably, targeting 15% of power generation to be sourced from renewables by 2030. With the country’s electricity needs expected to reach around 30,000 MW by 2030, renewables would need to provide some 4500 MW by that date to meet the 15% target. Progress towards this goal could also help Kuwait to lower its energy import bill.

Towards this objective, the country is implementing a public-private partnership (PPP) programme, converted from an engineering, procurement and construction contract that was signed during the pandemic, to raise capacity at the Al Shagaya renewable energy park. In 2022 Kuwait announced plans that the new PPP opportunity would be to develop a 2 GW wind and solar project at the park, a 45-minute drive west of the capital. It was tendered by the Kuwait Authority for Partnership Projects in November 2022. The first of four development phases added 70 MW of renewable energy capacity – which included 50 MW of concentrated solar power, 10 MW of photovoltaic solar and 10 MW of wind – upon opening in 2019. The park is expected to offer some 4 GW of renewables capacity by 2030. Bidding for the construction of another solar plant near Al Shagaya was reopened in mid-2021 after pandemic-related delays: KNPC’s Al Dibdibah plant with 1.5 GW planned capacity.

Efficiency Through Innovation

In a move to lower emissions and reduce operational costs, Kuwait is also taking steps to raise energy efficiency. This includes the development of combined-cycle power plants, which can, for example, use a gas turbine to generate electricity from the combustion of natural gas while simultaneously using a steam turbine to generate electricity from the exhaust heat of the gas turbine. Combined-cycle plants are expected to account for the bulk of Kuwait’s capacity expansions during 2018-35, which should help raise the efficiency of power plants and likely prioritise natural gas production above oil, according to analysis from the Kuwait Institute for Scientific Research.

In 2018 Kuwait was recognised at the international level for implementing advanced technology to optimise production, with a nomination at the World Oil Innovations Awards. The digital production management system, the Kuwait Integrated Digital Field project, connects five complex, mature fields and over 1200 wells located in the north. Through this solution the country is able to maximise output through data-driven decisions and optimise the control of water from reservoirs thanks to the real-time integration of surface and subsurface data.

Digital Applications

The global energy industry accelerated digital technological development, which supported optimal decision-making along the value chain during the pandemic. Applications include the artificial intelligence-enabled shift from preventive to predictive asset maintenance through creating analytical models via large datasets. Practical examples of integrated asset plans from Kuwait include the data-enabled optimisation of rigs, which constitute a considerable cost for oil and gas; the modelling of reserves; and real-time drilling decision centres.

This presents an opportunity to raise the efficiency of oil production, while also lowering the risks associated with error-prone manual tasks. According to a September 2022 analysis from global consultancy firm McKinsey & Company, tech-enabled exploration and drilling could generate $2 per barrel of oil equivalent in upstream operations, while advanced analytics in pricing could yield 1-2% increase in sales downstream activities. Enhanced operational efficiency brought about by digital adoption can also help lower energy requirements as the country pursues reduced emissions targets. Technology also presents an important path to equipping Kuwaitis for the energy needs of the future, aligned with international objectives.

Combined-cycle plants are expected to account for the bulk of Kuwait’s capacity expansions during 2018-35, which should help raise the efficiency of power plants and likely prioritise natural gas above oil.


Historic challenges to developing Kuwait’s energy industry aligned with long-term goals have included protracted investigations regarding senior oil officials and energy mega-projects. Meanwhile, some hurdles to foreign participation – including a ban on foreign ownership of natural resources, some reluctance to permit foreign investors into the industry and the resultant reliance on enhanced technical service agreements for international participation – have also slowed progress and limited the transfer of knowledge and technologies.

However, there have been efforts to address these issues. As a positive indicator of Kuwait’s willingness to engage in dynamic private sector collaboration, the Kuwait Authority for Partnership Projects initiated a PPP for renewables development at Al Shagaya, and accepted tenders from June to September 2021.

The country increasingly recognises the opportunity for international collaboration to promote progress towards long-term goals. “The local oil and gas industry is actively seeking to attract more international partners that can help the country achieve its energy transition goals,” Bader Nasser Al Khashti, chairman of the Kuwait Oil Tanker Company, told OBG. “It is time for more collaboration and investment in this space, especially given Kuwait’s new scenario of unity, stability and purpose in the coming years.”


The benefits of ongoing efforts to diversify Kuwait’s economy and energy mix include resilience to fluctuating hydrocarbons prices and wider opportunities for domestic and overseas earnings, aligned with long-term development objectives. Encouraging private sector participation could help unlock the sector’s development potential, including the transfer of knowledge and technology – and possibly create more value-addition opportunities.

Capitalising on Kuwait’s potential for non-associated gas production, heavy oil production as well as crude oil processing will be important for socio-economic growth in 2023 and beyond. Investment in projects that support the expansion of Kuwait’s energy sector look set to present a standout opportunity to facilitate economic diversification, raise in-country value addition and promote progress towards international development goals in the years ahead.