Opposition demands ‘true’ reserve figures in Kuwait

Kuwait's opposition that swept the elections is opposing any production hike without a declaration of the country's real oil reserves.

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By  Jyotsna Ravishankar Published  July 4, 2006

Kuwait’s opposition alliance, which swept to victory in parliamentary elections on June 30th, will reject a government plan to raise oil production capacity in the light of reports that the country’s reserves are half the official figure, a leading opposition MP said. “We will work to introduce key changes to the government oil policy in a bid to halt plans that aim to raise oil production, because such plans are unnecessary,” liberal MP Abdullah Al Nibari said. A group of lawmakers in the previous parliament had submitted a bill that would limit Kuwait’s annual production to 1% of proven reserves. Based on official reserve figures this would freeze Kuwait’s production at 2.5 million barrels per day (bpd), scuppering its plans for a massive production increase. But if lower, more conservative figures are taken into account—as some opposition leaders want to—then Kuwait would have to halve its current production, which would drive world prices higher. Parliament has already delayed government plans to open Kuwait’s northern oil fields to development by foreign companies, and the results of last month’s elections may have further muddied the water for investors as political analysts take stock of the results. The opposition alliance composed of Islamists, liberals and nationalists, for the first time gained an absolute majority after winning 33 of the 50 parliamentary seats. Kuwait’s parliament can influence the government and is generally independent of the Emir, Sheik Sabah Al Sabah, who holds executive powers and pushed through women’s suffrage last year when he was the prime minister. The elections are pivotal for economic development and energy development policies, say political analysts. Based on its long-term strategy, the government plans to raise its output capacity to four million bpd by 2020 at a cost of around US $20 billion, but energy policy reforms are key to achieving it. And a question mark now hangs over those policy changes. Nibari, who was among MPs who worked to nationalise Kuwait’s oil industry in the 1970s, also backed industry reports that Kuwaiti oil reserves stood at 48 billion barrels compared to the official figure of 99 billion barrels. The international oil newsletter Petroleum Intelligence Weekly (PIW) reported in January, that proven reserves were only 24 billion barrels and the rest were probable reserves. “The information I have obtained through my sources and based on official figures I saw when I was an MP considerably support the PIW report,” Nibari said in remarks published in an AFP report. Kuwait energy minister, Sheikh Ahmad Al Sabah has not yet given a categoric reserve figure since the report was published. When asked during an Opec meeting following the PIW report, the minister said, “The report contained some right information but not the whole picture. The information is related to only 31 reservoirs we are currently working on. It does not include reserves in another 74 reservoirs which are not developed.” The controversy led veteran Kuwaiti lawmaker Ahmad Al Saadun to demand that the government reveal what he calls “the truth” about the emirate’s oil reserves. “This raises justified and legitimate concerns that these reserves could be depleted in a very short duration on the basis of current production figures,” Al Saadun, a three-time former speaker, said in a question sent to the energy minister in March. “We must know the full truth on the proven and non-proven reserves and other data regarding the oil wealth,” Al Saadun said. The MP has not yet received an answer. Kuwait, whose official figures give it about about 10% of global petroleum reserves, is pumping around 2.5 million bpd.

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