Overview

Kuwait is one of the world’s top producers and exporters of oil, but despite significant domestic production of gas – which exceeded 15 billion cubic metres in 2012 – it is forced to use imports to meet its growing demand.

Kuwait used 18.2 bcm of gas in 2012, making it the world’s 37th-largest consumer of the fuel, according to the United States Energy Information Administration (EIA). In comparison with other Middle Eastern countries, Oman consumed 20 bcm (36th largest) and Bahrain consumed 13.5 bcm (41st largest).

Kuwait has attempted to boost gas production from non-associated fields for use in power generation, water desalinisation and petrochemical production. The country’s power generation mix is dominated by oil, and an increase in gas production would free up more oil for export.

Gas production has increased since 2009, while the discovery of non-associated gas fields in the north of the country has encouraged international investment. Kuwait Petroleum Corp. (KPC) signed an enhanced technical service agreement with Shell in 2010 to bring some of these fields into production. However, they are challenging to develop. The fields are sulphur-rich and located in complex geology, meaning the gas produced needs expensive processing before it can be used.

Kuwait’s demand for gas is high as a result of the country’s subsidies on fuel and energy. The subsidies could cost the country $18.2 billion in the 2014-2015 tax year, according to a report published by Reuters. Other North African and Middle Eastern countries, such as Egypt and Iran, have been forced to reform their energy subsidies in recent years to limit the impact on their national budgets and curb consumption.

Any move to reform energy subsidies is likely to face fierce opposition from Kuwait’s elected parliament and population. Subsidies have led to profligate consumption; with a population of just 2.7 million and consumption of 18.2 bcm/y, the country needs to improve its energy efficiency.

Kuwait took the significant step of chartering an FSRU to meet domestic gas demand in 2009. The country imported 2.7 bcm of gas through the Mina al-Ahmadi-based FSRU in 2012, according to the EIA.

Page updated: 26/08/2014