Kuwait Times

Published Date: May 12, 2007

KUWAIT:  Oil Minister Sheikh Ali Jarrah Al-Sabah said he plans a major shake-up in Kuwait's oil sector by promoting young staff to top posts, in comments published yesterday. "What I have noticed is that the oil sector (management) has become flabby ... Now I plan to promote people from the second and third lines to the top ... We have to tell certain officials thank you," Sheikh Ali told Al-Qabas daily. The new appointments will be announced in September, said Sheikh Ali who took over as energy minister in July and was retained in a new cabinet formed in March.

Last month, the chief executive officer of national oil conglomerate Kuwait Petroleum Corp (KPC) Hani Hussein tendered his resignation which was accepted by Sheikh Ali, saying it was for personal reasons. Hussein had served for some three decades in the state's oil sector and was promoted to the top post in August 2004. KPC was established in the early 1980s to oversee the state's oil industry inside and outside Kuwait. Along with its several subsidiaries it controls huge crude reserves.

Sheikh Ali also confirmed to Al-Wasat newspaper that the state's proven oil reserves have fallen to 48 billion barrels, as reported last year by Petroleum Intelligence Weekly, down from an announced 100 billion barrels. However, he said Kuwait has additional probable reserves of around 150 billion barrels, especially after recent discoveries. Last month, Kuwait announced a significant oil and gas discovery in the northern Dhabi area, without giving details of quantities. The state also announced a huge free gas discovery in 2006.

The minister said the discoveries would speed up Kuwait's plans to raise production capacity to four million barrels per day (bpd) as the target is expected to be achieved by 2012 instead of the planned 2020. OPEC member Kuwait currently pumps around 2.4 bpd. Kuwait controls nearly one-tenth of global oil reserves. It is the world's seventh-largest oil exporter.

Sheikh Ali also told Al-Wasat that Kuwait is in the final stages of drawing up its controversial multi-billion project to develop oilfields in the north of the country. The long-planned scheme called Project Kuwait to develop four oilfields with the help of multinational oil companies has met opposition from some parliamentarians. Two years ago, Kuwait estimated the cost of the project at $8.5 billion. The minister has asked investment banks Morgan Stanley and Lazard to review the project, with a view to submitting a revised plan to parliament again sometime this year.

"We are in the finishing stages," Sheikh Ali told the newspaper. A month ago he said Kuwait would unveil plans for the project within two months. He said the state needed the help of international companies because drilling in the northern fields would be difficult. "If it is not difficult we would not bring them in ... we would not need them in the first place," he said. Sheikh Ali said all big international companies were still interested in providing technical assistance despite the long decision-making process.

"They are not only keen but devoted to Project Kuwait," he told the paper, adding that some firms had even sought the help of their governments to express their interest. He did not name any company. Companies that have vied for the contract to boost output from the fields by 400,000 barrels per day (bpd) include BP, Exxon Mobil and Chevron Corp. Sheikh Ali said state firm Kuwait Oil Co (KOC) had been put in charge of oil and gas production in the Al-Layah field in northern Kuwait. KOC is the upstream arm of state-owned Kuwait Petroleum Corporation (KPC). The scheme has been under discussion since the early 1990s, but opposition figures have said there is no reason to boost output with state coffers fattened by high oil prices. - Agencies