Kuwait's crude burn hit record in July

Kuwait burned a record amount of crude in its power and water plants in July, as surging summer electricity demand coincided with a drop in associated gas output resulting from the Opec+ production restraint deal.

The Mideast Gulf state burned just under 184,000 b/d in July, which was around nine times higher than a year earlier, according to the latest data released by the country's electricity and water ministry.

Kuwaiti summers are brutally hot, and many residents and citizens typically seek brief respite outside the region. But that was impossible this year because of Covid-19-related restrictions closing the country's airspace. As temperatures hit 52°C, Kuwait's peak load reached a record 14.96GW, up by 4pc on July 2019.

Like many of its Mideast Gulf neighbours, Kuwait relies largely on associated gas output for power generation and water desalination. It is normally enough in the cooler winter months, and is usually topped up in summer with LNG imported at a floating storage and regasification unit.

But Opec+ crude output cuts have reduced the amount of associated gas available. Argus estimates that Kuwait produced 2.15mn b/d of crude in July, up by 100,000 b/d from 2.05mn b/d in June, but considerably lower than Kuwait's self-reported 2019 average of nearly 2.68mn b/d. This meant that Kuwait was only able to supply 1.32bn ft³/d of gas in July, compared with nearly 1.6bn ft³/d in July 2019.

Lower gas output resulting from the Opec+ crude production cuts has been an issue across the Mideast Gulf. The UAE said it produced 103,000 b/d above its Opec+ crude quota in August to help meet higher domestic power demand . Energy minister Suhail al-Mazrouei has since said the country will compensate for this overproduction with extra cuts in October and November . The Opec+ alliance eased its collective output cut from 9.7mn b/d in May-June and 9.6mn b/d in July to 7.7mn b/d in August through the rest of this year.

Crude has even overtaken heavy fuel oil as the main liquid fuel for Kuwaiti power generation. Kuwait burned 142,000 b/d of fuel oil in July last year, compared with around 28,000 b/d in July this year. Fuel oil burning should drop further next year, with the completion of the long-awaited Clean Fuels Project by the end of this year. The CFP involves the integration and upgrade of the 346,000 b/d Mina al-Ahmadi and 265,000 b/d Mina Abdullah refineries, which should result in reduced fuel oil output.

Kuwait signed a 15-year LNG import deal with Qatar earlier this year. Beginning in 2022, the agreement calls for 3mn t/yr to be delivered to a new permanent LNG import terminal which is being constructed at Al-Zour in the south of the country. The oil ministry is also making tentative progress developing technically challenging non-associated gas resources, which could eventually boost production from the country's Jurassic sour gas fields to 1bn ft³/d (10.4bn m³/yr) by 2023, up from around 500mn ft³/d now. Three Jurassic production facilities are already producing. Most recently, KOC commissioned one at the East al-Raudhatain field, built by US oil service firm Schlumberger in 2018. Units at the Sabriya and West al-Raudhatain fields both came on line in January 2018.

By Adal Mirza

Kuwait fuel burn for power and water b/d Jul-20 Jul-19 &#177;% Gas (bn ft&#179;/d) 1.32 1.58 -17 Crude 183,833 21,044 734 Gasoil 44,491 27,599 61 Fuel oil 28,042 141,954 -80 Source: ministry of electricity and water

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