Kuwait eyes 15% cut in refining to boost exports
Kuwait is considering cuts of up to 15 per cent to its near million barrels per day(bpd) refining system during the winter months to reduce the sales of cheaper fuel oil and at the same time boost exports of more lucrative crude oil industry sources said.
They said the low runs will also aid Kuwait petroleum Corp (KPC) in its efforts to market the enormous volumes of middle distillates produced from its refining system in the face of rising supplies in the Middle East and the
Gulf state losing its preferential tariff treatment in Europe.
KPC is thinking of cutting runs at all its refineries due to the slack demand for fuel oil in winter. This will be small around10-15 per cent and will be from November to February.
KPC operates three refineries at Mina Abdulla, Mina Ahmadi and Shuaiba processing a total of 915,000 bpd. The cuts would add up to 150,000 bpd of extra crude oil to the international markets.
According to a Reuters survey Kuwait produced 2.15 million bpd of crude in September compared to its OPEC quota 2.038 million bpd. From November the Gulf State will have a lower quota of 1,966 million bpd.
Kuwaiti crude is sold around the world in one grade: Kuwait Export Blend, which is medium-heavy and has a high Sulphur content comparable to other sour grades such as Russian Urals and Saudi Arab Medium.
It is sold at flat to a small premium over Saudi Medium prices in the west and typically at a discount to the Asian Oman-Dubai marker in the East.
The change in the Kuwaiti thinking was fuelled by several changes in the market that had the net effect of lowering the value of its oil products.
The value of fuel oil versus crude has deteriorated in recent weeks and spread is expected to worsen in the coming months due to rising supplies in the region as power generators raise their usage of alternative fuels such as the cleaner natural gas.
Kuwait may opt for two streams of crude oil
Kuwait expects to be forced eventually to produce two different streams of crude oil – heavy and light during the next decade.
This duel stream production is one of the long-term challenges facing the Opec members as it tries to achieve an increased long-term production goal of 3.5 million barrels per day(bpd) by 2010.
Kuwait fields currently produce a variety of crudes, most of which are blended to achieve an expert quality of around 30.5 or 31 degrees API.
The KPC Chief said, “In order to handle it,we have to modify the refineries to take the heavy crude, you have to modify your tankage, you have to modify your export facilities. To that anticipation, yes, we think in the long term we’ll have much more heavy crude”.
“And in the long term, we do see that we will have two grades of crude oil – a heavier and a lighter”, he added.
KUWAIT – Pressing the Advantage
Petrochemical Industries Company (PIC) is making up for lost time. With the Saddam Hussein regime ousted from Iraq, Kuwait’s stateowned petrochemical producer is pressing ahead with a $ 3,500 million investment programme. Its completion in 2007 will see olefins capacity doubled and the Gulf state joining the ranks of the aromatics producers.
Three projects are planned at Shuaiba industrial zone. The largest known as greater Equate, will comprise an 850,000-tonne-a-year (t/y) ethane cracker, a 600,000-t/y ethylene glycol/ethylene oxide unit and an extra 400,000 t/y polyethylene (PE) capacity. PIC also plans to build a 300,000-t/y of styrene facility and an aromatics complex comprising two units - one producing 650,000 t/y of benzene and paraxylene and the other 500,000 t/y of monomer aromatics.
Create Equate will be built a new project company, to be owned by PIC the US Dow chemical company and local private investors .The styrene plant will be built by a second project company, to be owned by Dow and PIC, with the remaining shares being offered to local private investor.
In the late October, three US firms - Fluor Daniel,Foster Wheeler and Bechtel- submitted bids for the role of project management consultant (PMC) for Greater Equate and the syrene project. A selection is due by year-end. The next stage in the project implementation will be preparing the front –end engineering and design (FEED) for the proposed new facilities. Work is also going according to schedule on the aromatics complex. Bechtel, which is acting as PMC, is preparing the FEED package. Construction on call the projects is scheduled to start by the third quarter of 2004.
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