Kuwait is sticking with plans to add half a million barrels a day of oil-production capacity as it prepares for the eventual expiration of the output quotas OPEC adopted to help drain a global oversupply, the head of Kuwait Oil Co. said.
State-run KOC plans to raise the Gulf nationâ€™s capacity from its current level of 3.15 million barrels a day, Chief Executive Officer Jamal Jaafar said in an interview in Kuwait City. The company, which is responsible for most of Kuwaitâ€™s domestic crude production, will add capacity even if the Organization of Petroleum Exporting Countries decides to extend the supply cuts beyond June, he said.
â€œWe will continue to increase production capacity because we have a five-year plan to reach 3.65 million barrels a day by 2021, so we canâ€™t stop investing in that,â€ Jaafar said on Wednesday. â€œWe will take advantage of the OPEC-cut deal to perform maintenance on facilities in the fields.â€
OPEC agreed in November to reverse its strategy of pumping without limits to defend its market share against increased supplies, including oil from US shale deposits. The group won pledges from Russia and other producers to contribute, targeting collective cuts of 1.8 million barrels a day for six months starting in January. Benchmark Brent crude, which traded at more than $115 a barrel in June 2014, has stemmed losses since the deal was announced and was trading down 11 cents at $55.86 in London at 2:41 p.m local time.
â€œKOC is producing 2.7 million barrels a day now, and we will maintain this under the deal,â€ Jaafar said. â€œAt the moment we have the capacity to reach 3.15 million barrels a day, but we will stick to the OPEC agreement.â€
KOC has signed three service agreements with Royal Dutch Shell Plc and another with BP Plc to develop exploration and production projects, he said. The company plans to drill its first offshore exploration wells by year-end, including wells near Failaka Island in the Persian Gulf, Jaafar said. Kuwait is OPECâ€™s fifth-largest producer.
The company plans to shut facilities and oil fields in the east and south of the country for maintenance, while northern fields will remain open because they produce a higher-quality crude that can be used for blends that are exported, he said.