Kuwait Petroleum to spend over $500bn by 2040

Kuwait Petroleum boss Nizar Al-Adsani said the corporation intends to lift domestic oil refining capacity to 2 million barrels per day. (AFP)
Updated 31 January 2018
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Kuwait Petroleum to spend over $500bn by 2040

KUWAIT CITY: Kuwait Petroleum Corp. expects to spend more than $500 billion as it boosts its crude oil production capacity to 4.75 million barrels per day in 2040, the national oil firm said on Wednesday, outlining ambitious growth plans for the next two decades.
“KPC is expected to spend $114 billion in capex over the next five years and an additional $394 billion beyond that to 2040,” Chief Executive Nizar Al-Adsani told an oil industry conference.
Kuwait’s current oil production capacity is around 3.15 million bpd. It revealed the plan to lift capacity to 4.75 million bpd early last year.
The figure would exceed the current output of Iraq and Iran, OPEC’s second and third biggest oil nations, whose production was 4.4 million and 3.8 million bpd respectively in December.
Iraq and Iran plan to raise output steeply in the coming years to compete with OPEC leader Saudi Arabia, which produces around 10 million bpd and has capacity of more than 12 million bpd.
However, Iraq and Iraq are running far behind their targets to expand output because of infrastructure constraints, red tape and, in the case of Iran, the threat of Western sanctions.
The move by Kuwait to expand capacity signals a willingness among OPEC producers to fight for market share in the long term as global oil demand rises and as the organization faces competition from Russia and two fast-emerging oil superpowers, the US and Brazil.
Al-Adsani also told the conference that KPC intended to lift domestic oil refining capacity to
2 million bpd by 2035, while ensuring maximum offtake of domestic heavy oil production and taking into consideration the need to meet local energy demand.
KPC recently began a pre-feasibility study to lift refining capacity inside Kuwait by almost 300,000 bpd, Al-Adsani said without elaborating. Capacity was estimated at 936,000 bpd in 2015, according to the US Energy Information Administration.
The company intends to expand into downstream derivative and specialty petrochemical products at facilities inside and outside the country, Al-Adsani added.
Meanwhile, non-associated natural gas production in Kuwait is to increase to 2.5 billion cubic feet per day (cfd) in 2040, from 0.5 billion cfd expected in April 2018 and 1 billion cfd by 2023, Al-Adsani said.
As part of efforts to reduce emissions of harmful gases, KPC’s future power plants will be gas-fired, although it will use renewable energy when that makes commercial sense, he added.


Pakistan government ready to pay political cost to salvage sinking economy, official

Updated 22 April 2019
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Pakistan government ready to pay political cost to salvage sinking economy, official

  • Pakistan in talks with IMF to bag $6-8 billion bailout program
  • Country’s financial experts expect thumbprint of IMF program on the upcoming budget

KARACHI: As Pakistan steps up efforts to negotiate loan program from the International Monetary Fund (IMF) before presenting federal budget for fiscal year FY20 next month, the top officials say the government is taking steps to salvage sinking economy, bracing itself for political repercussions.
Pakistan is currently negotiating with IMF expecting $6-8 billion loan program for stabilizing its wobbling economy suffering from current account deficit.
The country’s financial experts expect the upcoming budget to bear the thumbprint of IMF if a bailout is finalized before the budget is presented, which may not be before May 24, according to officials.
“As has been said earlier that the budget would be presented next month. Now we are taking steps that are not beneficial politically but we have to save the country and anchor the economy at a level where it does not further deteriorate. The situation is difficult but the government is trying to provide relief to economically vulnerable segment of society,” Syed Shibli Faraz, Leader of the House for the Senate of Pakistan, told Arab News on Monday.
“The government is cognizant of the fact that the recent gas and power tariff hike was painful for the masses and is now reversing its impact,” senator Faraz said adding that “lack of political will of the previous governments led to things reach an alarming state where ignoring them any further will lead to everything collapsing. It was because the previous governments did not comply with the IMF conditions.”
Talking about general perception that the IMF program will come with harsh conditionalities including additional taxes and expenditure curtailment that may slow the GDP growth rate, Faraz said, “I have also seen newspaper reports of PKR 600 billion to PKR 700 billion additional taxes [to be levied in the next budget] but I don’t know how we will do it?”
“However, the government will focus on broadening tax net instead of further burdening those who are already paying taxes,” he added.
Many economists question the wisdom behind such huge tax collection target when the fund has already downgraded country’s economic growth.
“When the IMF itself says that the growth would be around 2.9 percent then how such massive additional taxes could be generated from the depressed economy,” Dr. Ashfaque Hassan Khan, member of Economic Advisory Council, questioned while talking to Arab News saying “they are negating their own numbers.”
“This program will not work,” Khan warned. “I have repeatedly called for getting the plan B ready, which means aggressive import compression policy that requires less dollar and more focus on remittances.”
Pakistan is also fine tuning a new tax amnesty scheme to be announced to whiten the black money and facilitate documentation of undeclared assets hoping to collect huge sums. “We are expecting to collect a large amount and bridge the fiscal budget gap to some extent,” Faraz said.
In a major cabinet reshuffle recently, Prime Minister Imran Khan replaced country’s finance minister Asad Umar with Shaikh appointed as special adviser to the prime minister on finance, at a crucial time when Pakistan is in final stages of negotiating an IMF deal.
“Asad was working on solving basic structural issues of the economy but he become a victim of big lobbies,” Muzzamil Aslam, senior economist, told Arab News.
“Hafeez Shaikh is a technocrat who does not live in Pakistan and only comes in a ministerial position. He knows how to accommodate policies of international lenders without looking at the long term impact of their policies. He did not bailout or rescue any economy where he worked,” Aslam said.