Kuwaiti oil, gas and petrochemicals

Oil and gas

BMI has commented that the main challenge to private investment in Kuwait is the dominant role of the government in the oil and gas sector. The recent drop in global oil prices has also contributed to these challenges, as investment in exploration and production will continue to create a less competitive investment climate within the country. The government has however, according to BMI, managed to make measured strides in increasing production, but without more private sector investments, the company expects Kuwait to fall short of its production target.

When it comes to natural gas, Kuwait’s modest reserves will eventually see a decline in production which will render imports more valuable to its overall domestic energy basket, BMI has said.

Petrochemicals

BMI believes that Kuwait’s petrochemicals industry is driving towards diversification and will be adding value to output which should help it secure export markets at a time of heightened global competition and tougher demand conditions. The country’s main export markets for petrochemicals, Asia and China are likely to diverge this year. While, India strengthens with a stimulus to consumption and increasing business confidence, China is facing a downturn in growth, although government intervention should prevent any recessionary problems. In the medium term, BMI has said that both countries will witness increased market self sufficiency. At the same time however, the Asian market will be increasingly flooded with cheap shale based petrochemicals from the US.


Edited from report briefs by Claira Lloyd

Published on 10/02/2015


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