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It seems Kuwait has been very active in taking measures to
improve conditions in favour of its oil industry, in an effort to
strengthen its position in the global market. Its relations with
Iraq seem to be improving, with the two sides looking ready to
resolve any outstanding issues. First steps have already been
taken, after they both agreed to explore opportunities for new oil
fields on their border. The two nations signed a contract with a
company to prepare technical and reservoir studies on two fields,
Rumaila South Rataqa and Safwan Al Abdali.
Meanwhile, Kuwait has been negotiating a contract renewal with
Egypt, which could result in doubling volumes of crude oil imported
by Egypt, with further adjustments to the merit rating scale.
According to data by IHS Markit Commodities at Sea,
Egypt has been importing around 100,000 b/d of crude oil from
Kuwait. Upon contract's expiry, this could reach 200,000 b/d.
Kuwait has been primarily exporting to countries across the Far
East and India, with some of these importers having increased their
exposure to barrels from other Middle Eastern producers after the
end of waivers on Iranian sanctions. For Kuwait, Japan has become
interested in absorbing more, with trade flows having increased
around 17% during the first seven months of 2019, year-on-year.
Kuwait has exported almost 13% of this year's volumes to Japan,
much higher than the same period last year, when 10% of its exports
ended in Japan.
Kuwait's strategy also involves launching new grades to the
market, with a new heavy sour crude oil grade expected by the end
of Q3 2019, which will primarily target Asian importers. The crude
grade is understood to have an API of 16 and sulphur content of
around 4.9%. It will be produced by Lower Fars and Umm Niga fields,
with current capacity standing at 60,000 b/d.
Kuwait Petroleum Corporation (KPC) plans to offer this new grade
initially to existing customers, with Indian refiners expected to
be very interested, these barrels are very similar to those
previously imported from Iran. KPC intends to introduce another
grade, this time a medium heavy one, with production from the
Rawdatain field.
Progress is on track for Kuwait to meet its long-term plans of
increasing overall production capacity to four million b/d. More
than a tenth of this will come from the Partitioned Neutral Zone,
shared with Saudi Arabia. Discussion recently restarted, about the
offshore Khafji field and the onshore Wafra field, jointly owned by
the two countries. Total production rate approached 500,000 b/d in
the past, but has been offline since May 2015.
Posted 08 August 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, IHS Markit
