The energy sector continues to dominate the Kuwaiti economy, with oil rents making up the vast majority of government revenue and GDP. Income from oil has declined since the peak directly after the conflict in Ukraine, though the unwinding of production cuts by Organisation of the Petroleum Exporting Countries (OPEC) will bring some additional income to the government treasury. Growing domestic energy demand has caused a rise in liquefied natural gas (LNG) imports, primarily from Qatar, though the country’s refining sector is set for growth after the new Al Zour refinery became fully operational in 2024, localising more of the petrochemical value chain. The utilities sector has steadily grown its production capacity, though heat waves continue to cause power cuts when demand outstrips supply.
Structure & Oversight
The Supreme Petroleum Council (SPC) is the policymaking body for the oil and gas sector. Established in 1974, the SPC is chaired by the prime minister and has the ministers of finance, oil, commerce and industry, and foreign affairs as its members, and its duty is to draw the general policy of petroleum wealth. The SPC plans both long-term goals, such as national energy targets and short-term strategy, such as how to handle increased regional tensions. The Ministry of Oil is the main regulatory authority of the sector and led by Tareq Al Roumi, who is also the chairman of the Kuwait Petroleum Corporation (KPC), the national oil company. The ministry implements and enforces various SPC policies, in addition to overseeing KPC and its various subsidiaries.
The central piece of legislation for the sector is Law No. 6 of 1980, which established KPC, the parent firm of the Kuwait National Petroleum Company (KNPC); the Petrochemical Industries Company (PIC); the Kuwait Oil Tanker Company (KOTC); and the Kuwait Oil Company (KOC), which were all separately operating entities prior to this law. The law also lays out how KPC’s profits are to be used, with the majority allocated to the state treasury; as well as detailing oversight over KPC and its responsibilities. Tender Law No. 49 of 2016 is another important regulation, regulating government tenders and thereby effectively all transactions within the energy industry. It also lays out local content requirements.
For the domestic energy and utilities sector, the Ministry of Electricity and Water and Renewable Energy (MEWRE) is the policymaker and regulator, and led by Subaih Abdulaziz Abdul Mohsen Al-Mukhaizeem. The minister was also the acting minister of finance and the minister of state for economic affairs and investment. MEWRE oversees all aspects of generation, transmission and distribution of electricity, and is the offtaker and distributor of water and electricity within the country.
In addition, the ministry is the shareholder of most water- and electricity-producing entities. MEWRE develops and executes water and electricity policy, including renewable energy targets. MEWRE has 11 subdivisions that are responsible for segments like electrical transmission, power stations, project tendering, water distribution and electrical distribution. The Higher Energy Committee (HEC) was set up in 2018 to improve coordination among ministries, regulators and infrastructure operations to smooth project implementation, especially in the context of installing large-scale renewable energy projects.
Utilities
The sector is primarily regulated by Law No. 39 of 2010, known as the Independent Water and Power Plants (IWPP) Law. This makes MEWRE the sector’s primary regulator, in addition to opening the sector to semi-private operators. The law saw minor updates in 2010, 2012 and 2015. Another important piece of legislation is Law No. 116 of 2014, known as the Public-Private Partnerships (PPP) Law, which created the Kuwait Authority for Private Partnerships (KAPP) and defined the mandate of the Higher Committee for PPP Projects. KAPP is the central player in transport, power, water and telecommunications tendering, and the authority also handles PPPs for sectors targeted for diversification, including communication, power, transport and education. It also manages the tenders for Kuwait’s renewable energy projects and can hold shares in projects on behalf of the government. The PPP Law has also created a clear regulatory structure for PPPs in the power sector, which were used to establish the Al Zour North IWPP. A final notable law for the utilities sector is Decree Law No. 75 of 2025, which was implemented in June of that year to eliminate the widespread issue of non-payment of utility bills. Starting in September, residents and businesses that fail to pay their service bills will face a suspension of utility services.
Key Policies
Similar to other GCC members, Kuwait unveiled a long-term economic diversification and development plan. New Kuwait 2035 intends to make the country a global centre for the petrochemical industry, increase foreign direct investment by 300%, develop the power sector and diversify its economy. The plan was updated in 2025 with critical infrastructure projects, real estate sector reforms and deepened development partnerships, primarily with Japan and China. Central to New Kuwait 2035 is a renewed push for Kuwaitisation by increasing fees for foreign workers and updating curricula to better prepare college and university students for modern employment opportunities.
Another policy is the Kuwait National Development Plan (KNDP) 2020-25. The KNDP 2020-25 has a wide scope, with a heavy focus on diversifying the economy, improving private sector participation among Kuwaitis, and reducing energy and water consumption. In 2024 oil made up 47.9% of Kuwait’s GDP, with its decline that year primarily due to low oil prices. According to the Central Statistics Bureau, while the contribution of the non-oil sector increased to 58.6% of GDP in the first quarter of 2025 from 56.8% in the corresponding period of 2024, this was caused by a reduction in the amount of crude oil produced, underscoring the importance of moving forwards with economic diversification.
Diversification
KPC has also announced a longterm plan, Strategy 2040, whose headline goals include increasing oil production to 4m barrels per day (bpd) in 2035, initiating foreign acquisitions, attaining net-zero emissions by 2050, growing domestic refining capacity and bolstering the petrochemicals industry. Two KPC subsidiaries are also exploring carbon capture, usage and storage (CCUS) opportunities. Total investment in the plan is expected to be $410bn through 2040. The plan says the company will optimise its portfolio so that mergers and restructurings are possible in aiming to cut costs and streamline operations. One challenge the plan may face is that it relies on a continued high demand for oil, part of an uncertain future with a worldwide transition to include more renewables.
Within the power and utilities sector, the HEC is looking to develop long-term development and modernisation plans. The country has plans to source 15% of its electricity from renewable sources by 2030, but a 2025 estimate by Rystad Energy, an energy consultancy company, shows that Kuwait may fall short, with its estimates at 7% from renewable energy by 2030. The Kuwait Public Policy Centre, established by the government to monitor national development plans and New Kuwait 2035, says that a lack of coordination among institutions is the main reason for slow deployment of renewable energy technologies. The country does not possess a government authority with a dedicated focus on renewable energy that would have the ability to influence existing institutions to tilt policymaking in favour of the renewables sector. The current frameworks in place, which include substantial conventional energy subsidies, do not yet include incentives for the widescale adoption of renewable energy applications. At the time of writing, plans on how the country will achieve the renewable energy target of 15% have not been published. However, efforts to include investment for the segment within a central plan has seen nominal progress, with KAPP making steps to improve this process, but the renewable energy pipeline is still fragmented.
Electricity
Due to a need to reduce electricity usage during summer months, MEWRE proposed delaying the start of evening shifts to avoid overlapping peak energy usage, suspending flexible work schedules to reduce energy usage of partially occupied buildings and ending the academic year earlier to reduce demand from schools. In April 2025 MEWRE also announced a crackdown on unusual increases in electrical loads, which it suspects might be caused by cryptocurrency mining operations. Small, but valuable improvements, such as smart meters that will ease data collection and network will be rolled out nationally. The government has discussed privatisation of its power sector since at least 2010, when Parliament passed a privatisation law. In May 2025 a MEWRE undersecretary said that privatising the water sector was a top national and regional priority due to the increasing challenges surrounding water security and resource sustainability. This would align with a GCC-wide move towards privatisation of the power and desalination segments, though continued government presence in this area throughout the region makes the timeline to do so unclear. Instead, it is likelier that new IWPPs will be listed, as is the case with the Al Zour IWPP.
Key Entities
Within the fossil fuel industry, KPC is the primary actor. Its chairman is the minister of oil and other board members include the managing director of Kuwait’s sovereign wealth fund and an undersecretary from the Ministry of Finance. KPC is the sole supplier of all types of fuel in Kuwait and builds is strategy on meeting the country’s current and future energy needs. It also supplies MEWRE with the fuel necessary to operate its gas and steam turbines used in electricity generation.
KPC has eight subsidiaries, separated into upstream, midstream and downstream divisions. There are three companies in the upstream division. KOC focuses on offshore and onshore exploration; surveys and well-drilling; and selling its products to local, regional and international users. Kuwait Gulf Oil Company (KGOC) represents the government’s interest in the Partitioned Neutral Zone (PNZ), an area of joint sovereignty shared by Kuwait and Saudi Arabia. KGOC partners with Saudi companies to explore, develop and produce oil and gas in the region. The Kuwait Foreign Petroleum Exploration Company is KPC’s international upstream company and operates on five continents.
KPC has four companies in its downstream division. The KNPC operates refineries in Kuwait, in addition to the sale and distribution of all petroleum products in the local market. The Kuwait Integrated Petroleum Industries Company (KIPIC) operates and manages the Al Zour refinery, Kuwait’s largest complex for refining, petrochemicals manufacturing and LNG imports. Kuwait Petroleum International, also known as Q8, refines and markets fuel, lubricants and other derivatives worldwide. Q8 also holds stakes in refineries abroad, in Oman, Italy and Vietnam. Lastly, PIC produces olefins, aromatics and fertilisers. KPC’s sole midstream company is KOTC. It ships oil and gas products by managing tankers engaged in the transportation of crude oil, petroleum products and liquefied petroleum gas (LPG). It also serves as the agent for all tankers that call at Kuwaiti seaports and its gas branch is responsible for filling and distributing LPG for both local industry and domestic consumption.
Beyond KPC, some private actors operate in Kuwait. Boubyan Petrochemical was the first private company to enter the sector. Several of the supermajors also have operations in Kuwait. Shell has a long history of involvement in the country; BP works on certain fields; and ExxonMobil has extensive operations within Kuwait, especially in the PNZ. International oilfield service firms, including Saipem, Odfjell and Schlumberger also have offices in the country. In the power generation and water desalination sector, of the nine extant companies, seven are owned by MEWRE; meanwhile Shagaya Renewable Energy Park is owned by the Kuwait Institute for Scientific Research and KAPP.
The ninth IWPP is Al Zour North, which has been listed on the Boursa Kuwait since 2020. The company was established under the authority of KAPP and was the first listing of a utilities company in Kuwait. As of December 2024, 48.9% of the company’s stocks were listed and held by the public, the Kuwait Investment Authority held 5%, the Public Institution for Social Security held 6.1% and the remaining 40% is held by a holding company that is in turn owned by three engineering companies that manage the plant. If more IWPPs are set up for privatisation, the Al Zour North structure will likely be a blueprint.
Size & Performance
The energy sector plays a substantial role in the Kuwaiti economy. It makes up more than 90% of revenue and 45-50% of GDP, depending on oil prices. Oil also makes up 90% of Kuwait’s exports by value. According to the National Bank of Kuwait, in the 10 years leading up to 2023, oil GDP growth was negative and fluctuated in line with OPEC supply policy. The negative oil GDP growth is due to the fact that in 2023 oil production was 10% lower than it was in 2014 due to OPEC supply cuts. The decline in oil GDP was not balanced by growth in non-oil GDP, which experienced five consecutive quarters of contraction through the end of 2023. Oil’s importance is beyond purely economic, as wages and subsidies comprise more than 70% of the national budget. According to the Central Bank of Kuwait, government revenue in the third quarter of 2024 was KD5.7bn ($18.5bn), of which the oil sector constituted KD5.1bn ($16.7bn), or 90%. For 2022 and 2023, the last year for which annual numbers were available, oil revenue made up 92% and 91% of government revenue, respectively.
Energy Demand
KPC achieved revenue of KD37.5bn ($122.1bn) in FY 2023/24, down from KD43bn ($140bn) the previous year, while profit went from KD2.7bn ($8.8bn) to KD1.5bn ($4.9bn), the overwhelming majority coming from the sale of oil, gas, refined products and petrochemicals. However, a long-term perspective shows that while revenue in 2024 was down from the previous year, it was up from 2022 when revenue was KD31.8bn ($103.5bn) and profits were KD1.2bn ($3.9bn).
Domestically, nearly all of Kuwait’s energy needs are supplied by fossil fuels, with gas and oil holding equal shares. Kuwait’s oil consumption has grown from 494,000 bpd in 2014 to 519,000 bpd in 2024, with an average growth rate of 0.5% per year. Growth in gas consumption has been substantially higher, at 3.3% annually, growing from 17.9bn cu metres in 2014 to 24.6bn cu metres in 2024.
On the production side, oil extraction has declined from 3.1m bpd in 2014 to 2.7m bpd in 2024. Gas production has grown marginally, from 14.3bn cu metres to 14.9bn cu metres over the same period. Kuwait’s domestic consumption of fossil fuels is so substantial that nearly one-sixth of total production is consumed domestically and domestic gas production is no longer enough to keep up with demand. However, a series of new discoveries, including two offshore fields with a combined estimated size of 4bn barrels and a smaller discovery in the PNZ – together with additional initiatives to increase production in the Greater Burgan oil reserve in the south – ensure that the country will have enough reserves to keep oil production high for decades.
Downstream
The news is also good for Kuwait in the downstream sector. Refining capacity has grown from 936,000 bpd to 1.4m bpd between 2014 to 2024, with 4.3% annual growth. In late 2023 KIPIC commissioned the Al Zour refinery and reached its full capacity of 615,000 bpd in February 2024. It is the Middle East’s biggest refinery and among the largest in the world. According to KPC, the main products of its refining subsidiaries are gas oil, diesel, kerosene and naphtha, with fuel oil and other products constituting a smaller share. Exports of refined products have more than doubled since 2018, from 147m barrels to 341m barrels in 2023.
Water and electricity production is carried out by numerous power and desalination plants. According to MEWRE, the Shuwaikh gas station has six 42-MW turbines built in 2007 for a total of 252 MW, in addition to three water distillers and a reverse osmosis plant, producing 48m imperial gallons per day (MIGD). The Shuaiba North station has four turbines installed in 2009, producing a total of 875.5 MW and three distillers of 15 MIGD each commissioned in 2011, for a total of 45 MIGD. Shuaiba South station operates six relatively old 120-MW turbines from 1974, for a total of 720 MW and six distillers of 5 MIGD each, for a total of 30 MIGD. The Doha East station has seven 150-MW steam turbines commissioned in the 1970s and four 18-MW gas turbines commissioned in 1981, for a total of 1122 MW. It also operates seven distillers with a combined capacity of 42 MIGD. The Doha West station operates eight 300-MW steam turbines commissioned in the 1980s and five 28.2-MW gas turbines commissioned from 2008 to 2010 for a combined 2541 MW. The station operates 16 distillers with a capacity of 110 MIGD and in 2019 one reverse osmosis plant was added with a capacity of 60 MIGD.
Al Zour North has seven gas turbines producing 226 MW to 251 MW, for a total of 1632 MW and 10 distillers with a combined capacity of 107 MIGD. Al Zour South has 27 turbines ranging in size from 27.7 MW to 300 MW commissioned between 1987 and 2020, for a total capacity of 5990 MW. It also has 16 distillers with a capacity of 110.4 MIGD and since 2014 a reverse osmosis plant with a capacity of 30 MIGD. The largest power plant in Kuwait, Sabiya Station, has 30 turbines with a combined total capacity of 7046.7 MW in addition to eight distillers with a combined capacity of 100 MIGD.
Water & Electricity
Total freshwater production in Kuwait has grown steadily from 168.6bn gallons in 2012 to 191.9bn gallons in 2018 and to 208.5bn gallons in 2023. Freshwater consumption has grown concurrently, from 168bn gallons in 2012 to 192bn gallons in 2018 and to 208.1bn gallons in 2023. Over this period, per capita water consumption has declined marginally, by 2.5% from 43.9bn gallons in 2012 to 42.8bn gallons in 2023. Electrical production capacity has grown 31.9% from 15.3 GW in 2012 to 20.2 GW in 2023. Annual per capita electricity consumption in the country also grew, at 16% from 14,054 KWh in 2012 to 16,305 KWh in 2016.
Revenue from the utilities sector – electricity, freshwater and brackish water – has fluctuated substantially, from KD191.1m ($622.3m) in 2017 to KD425.7m ($1.4bn) in 2022. Revenue in the sector was KD352.5m ($1.1bn) in 2023. This variation in prices is not passed on to consumers. Electricity tariffs for the government sector were KD0.025 ($0.08) per KWh, KD0.002 ($0.007) per KWh for the residential sector and KD0.005 ($0.02) per KWh for the industrial sector. Water tariffs are set at KD4 ($13.02) per 1000 imperial gallons for the governmental sector, KD0.80 ($2.60) per 1000 imperial gallons for the residential sector and KD1.25 ($4.07) per 1000 imperial gallons for the industrial sector. As a result of these low prices, government spending on subsidies has increased significantly, from KD328.2m ($1.1bn) in FY 2017/18 to KD1.1bn ($3.7bn) in FY 2024/25, despite a subsidy reform in 2016 that updated prices originally set in 1960.
Energy Market
Kuwait’s major export markets are in Asia, which made up $53.4bn out of a total of $70.7bn in exports in 2023. China, India and Japan are the largest recipients, with export totals of $17.4bn, $9.5bn and $9.1bn, respectively. In previous years, South Korea, Taiwan and Vietnam have also been major export destinations. Oil made up more than one-half of exports by value in 2023, with refined petroleum making up an additional 32.7%, but in both 2021 and 2022 crude petroleum’s share was above 65%. In 2023 Asia made up 85% of cargo by tonnage unloaded by KPC subsidiaries, which declined slightly to 75% in 2024.
Due to Kuwait’s high energy consumption, petroleum gas was the second-largest import group by value in 2023, totalling $2.4bn and approximately one-third of the country’s total gas supply. This figure is expected to increase as Kuwait uses LNG to fuel its power plants during summer heatwaves and as a transitional fuel as oil-fired plants are decom-missioned. In August 2024 KPC signed a 15-year LNG deal with QatarEnergy to cover some of the growth in demand for lower-carbon fuel.
The country has pledged to achieve net-zero greenhouse emissions by 2060, with the oil sector setting the same target for 2050. Kuwait has 70 MW of renewable energy capacity, sourced from the 50-MW concentrated solar power plant, 10-MW wind farm and 10-MW photovoltaic plant at Shagaya Renewable Energy Park. An additional 1.6 GW is in the pre-construction stage and a further 3.2 GW is planned. CCUS is at the core of KPC’s net-zero initiative and the company expects to achieve 70% of its greenhouse gas reduction through the technology.
An important part of achieving Kuwait’s sustainability targets will be decreasing consumption. Reducing subsidies is politically challenging, but in 2024 the then-minister of energy said that MEWRE was developing policies to reduce demand for energy by 10% by 2030 compared to a 2020 baseline. In 2030 air conditioning is expected to constitute around one-quarter of total energy demand growth, as stricter regulations and the introduction of smart buildings and metering have the potential to have substantial impact on reducing energy consumption.
Outlook
Kuwait’s energy and utilities sector is entering a period of change. KPC, the parent company of the country’s upstream, midstream and downstream energy organisations has announced plans to consolidate its eight subsidiaries. Additionally, LNG imports are increasing and the first utility-scale renewable energy project will be connected to the grid by the end of the decade. Kuwait will also be obligated to navigate lower crude oil production and a rise in non-oil sector GDP in the first half of 2025, underscoring the importance of moving forwards with economic diversification. As Kuwait continues to boost production capacity and downstream investment, it is unclear at the time of publication what the impact of regional geopolitical tensions will be on international energy markets.
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