Kuwait confident of meeting Opec+ quotas: KPC CEO

Kuwait can hit its Opec+ crude production target for July and will be able to meet any further increases requested of it, according to state-owned KPC's chief executive Sheikh Nawaf Saud al-Sabah.

Kuwait "can go higher than [its July quota], and we have the plans in place right now to ensure that we can continue to match whatever increases are going to be required over the future," Sheikh Nawaf told the Bloomberg Qatar Economic Forum.

Kuwait was one of several Opec+ members to fall short of its target last month. Argus estimates that Kuwaiti crude production inched 10,000 b/d higher compared with April to 2.67mn b/d in May, leaving it around 20,000 b/d under quota for the month. The country's July target is 2.77mn b/d, up from 2.72mn b/d in June and 2.69mn b/d in May.

Rising targets are eroding spare capacity, and this is contributing to market volatility, Sheikh Nawaf said. "The more we're asked to increase production, the less spare capacity is going to be available, and that will in turn increase the volatility," he said.

The long-term investment required to boost crude production capacity is being constrained by mixed signals from consumers, who want more hydrocarbons in the short term but demand a transition to lower-carbon energy sources in the future, he said.

"Are consuming countries willing to ensure that they will continue to receive those hydrocarbons, albeit abated for carbon, will that security of demand remain?" he said. "It cannot be a war against fossil fuel. It has to be a partnership to reduce the carbon intensity of fossil fuels, to ensure that they remain a vital part of the energy transition."

For its part, KPC will continue to invest in its upstream capacity, including onshore and offshore exploration, Sheikh Nawaf said, noting that the firm received its first offshore drilling rig a week ago.

The company is also bolstering its refining capacity, with a target to bring the new 615,000 b/d Al Zour refinery online by the end of the year. This will enable Kuwait to supply more refined products to Europe at a time when the region is looking to replace Russian oil, notably diesel. Kuwait could also offer Europe a potential alternative to Russian Urals crude, as its Kuwait Export Crude (KEC) is of a similar sour quality, although the country has not seen a marked increase in demand.

"We are supplying all of our [European crude] customers, as they requested, [but] we're not seeing a huge demand increase on our energy," Sheikh Nawaf said. "Our crude tends to go to certain types of refineries, and while oil is a commodity, it's still not the same quality of crude that goes into every refinery."

Most of Kuwait's crude exports head to buyers in Asia under year-long term contracts.

By Ruxandra Iordache