Despite predictions of declining hydrocarbon consumption, significant demand remains due to economic transformations and disruptive events like the Covid-19 pandemic and the Russia-Ukraine conflict. However, underinvestment in new production and regulatory challenges may affect the oil and gas industry. Investors and non-financial partners are seeking direct engagement with oil companies to assess their environmental, social and governance performance, focusing on transition risks related to climate change.
With Kuwait being the 10th-largest oil producer in the world and the oil sector contributing 90% to the country’s fiscal revenue, Kuwait Oil Company (KOC) and Kuwait Gulf Oil Company (KGOC) have increased their efforts to align their operations and investment decisions with environmental priorities, including becoming carbon neutral by 2050, and with their national mandate to support socio-economic development.
For KOC and KGOC, achieving net zero requires a combination of technologies and a roadmap where long-term and short-term steps are clearly structured. In the long-term, carbon capture, utilisation and storage is set to play a central role in reducing direct emissions. In the shorter term, substantial progress has been recorded in reducing direct emissions stemming from gas flaring. Beyond this, the state-owned companies’ past experience in leveraging electrification to fuel operations underpins optimism for lowering indirect emissions. Finally, prospects for increased local and regional initiatives in afforestation should facilitate further emissions reduction.