PETROANALYSIS || ARTICLE

Kuwait’s 2030 Downstream Strategy

Published on

February 20, 2020

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Petroanalysis Team

Refining Strategy in Kuwait: The Clean Fuels PROJECT (CFP)

Kuwait has the sixth largest proven oil reserve in the world. This confers it to be among the main hydrocarbon powers of the world. This is evidenced by the BP Statistical Review of World Energy 2019 report, in which Kuwait’s proven oil reserves are recorded at 101.5 billion barrels in 2018 (5.9% of the world total).

The country’s oil production in 2018 stood at 3.05 million bpd, or 3.2% of the total. This is equivalent to a ratio of reserves to production of 91.2 years. Most of Kuwait’s natural gas comes from associated fields, linking it strongly with oil production figures. Kuwait had proven reserves of 1.7 trillion cubic meters, or 59.9 trillion cubic feet, at the end of 2018, which represents 0.9% of the world total. With an annual production of around 17,500 million cubic meters, the reserve-production ratio is 97 years.

The Arab Gulf country is also one of the top energy sector investors, with a range of mega-projects under way in refining, petrochemicals, new oilfield development and mature oilfield recovery. Its programs and projects are supported by a range of government-owned companies. However, while the sector is largely a national industry, Kuwait is also a destination for international private sector actors.

Due to its nature, opting for a policy of energy transition towards more sustainable sources is a challenge for Kuwait, as it uses the resources of its energy sector to promote economic diversification and boost value-added industries. However, according to a report published by Global Data Energy, Kuwait has made progress on some key projects to address these challenges, such as a new generation of facilities and methodologies through an ambitious sector development program, such as: Clean Fuels Project (PPC) and Al-Zour Refinery.
Clean fuels

As part of Kuwait’s 2030 strategy, the $ 12 billion Clean Fuel Project (PPC) is expected to be completed in April 2020 and the $ 16 billion Al-Zour refinery will begin operating partially in June of this year.

The CFP will integrate the 270,000 barrel-a-day (b/d) Mina al-Ahmadi and 466,000 b/d Mina Abdullah refineries into a single complex, with new units added to increase total capacity to 800,000 b/d and improve the quality of output.

A total of 16 new units are being built at the Mina al-Ahmadi refinery as part of the CFP, and 14 new units are being built at the Mina Abdullah refinery. The first unit to come online as part of the CFP was announced in October. It is a liquefied petroleum gas (LPG) processing unit at the Mina al-Ahmadi refinery with a capacity 2,264 b/d.

The higher-quality products produced once the CFP is completed and commissioned will conform to Euro-4 specifications. It came into force in Europe in 2005 and require sulphur levels to be reduced to 50 parts per million (ppm) for both diesel and petrol. KNPC says that the sulphur content in gasoline produced after the CFP is completed will be reduced from 500 ppm to 10 ppm, and in gasoil from 5,000 ppm to 10 ppm.

Al-Zour Refinery

Located 90 kilometres south of Kuwait, the facility will be one of the biggest refineries in the world when fully commissioned, providing 43 per cent of the entire country’s refining capacity.

It has been designed to process 615,000 b/d of light Kuwait export crude, or 535,000 b/d of mixed heavy crudes, and will produce Euro-5 specification fuel. The Al-Zour refinery will supply 225,000 b/d of low-sulphur fuel oil (LSFO) to local power plants, as well as producing jet fuel, kerosene and naphtha feedstock for petrochemical plants.

The contribution to the economy

The report comes to the conclusion that both projects are hugely ambitious with the potential to reshape the country’s economy. There will be significant potential for Kuwait to increase its market share in the US and Europe as exports rise. This could lead to a welcome boost in revenues. The increased production of high-quality downstream products may also provide a boost to local businesses. This could be particularly true for the petrochemicals sector and, further down the chain, entities that use petrochemicals to create high-value exports such as plastics.

Plans for a $10bn petrochemicals project within the Al-Zour downstream complex are already in place, and the front-end engineering and design (feed) for the facility is expected to be completed in May 2020.

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