Published: Saturday, 10 December, 2005, 09:25 AM Doha Time

KUWAIT CITY: The Gulf state of Kuwait has earmarked more than $44bn over the next 15 years to upgrade its oil industry and boost output to 4mn bpd.

"Total estimated investments in the oil sector from 2005 to 2020 will exceed $44bn. We aim to modernise the sector and boost output to 4mn bpd," energy ministry undersecretary Issa al-Oun told AFP as Kuwait prepared to host a meeting of Opec on Monday.

The money will be spent on mega projects such as a large refinery and upstream projects to raise output, in addition to a number of large petrochemicals plants, he said.

Kuwait, which sits atop 10% of the world's proven reserves of around 100bn barrels, has the fifth largest Opec quota at 2.227mn bpd but its actual production is around 2.5mn bpd.

Boosting production capacity from the current 2.7mn bpd to 4mn bpd by 2020 will cost the Opec member an estimated $20bn on projects including upgrading production facilities, pipelines, gathering centers, booster stations and export terminals. This year, Kuwait Oil Co (KOC), which operates upstream activities in the Gulf emirate, awarded three major contracts worth $3.3bn to two South Korean companies and a British-based firm.

It ordered a $1.25bn oil terminal from Hyundai Heavy Industries with oil storage tanks and offshore pipelines for Al Ahmadi Port, Kuwait's main oil export terminal. KOC also signed a $1.2bn contract with South Korea's SK Engineering for 10 oil gathering centres and a gas booster station.

British-based oil services firm Petrofac won a $680mn contract to install hundreds of kilometres of pipelines above the ground to replace old underground pipelines in addition to $125mn maintenance deals.

All these projects are due to be completed in 2008.

And despite controversy, the emirate also appears to be forging ahead with Project Kuwait, an $8.5bn investment to develop four oilfields in the north with the help of foreign oil majors.

It aims at raising production of the fields from 530,000bpd to 900,000bpd over a 20-year period.

Parliament is due to debate the project on January 16 amid fears by opposition MPs that it would give foreign companies control of Kuwait's vital oil wealth.

The project, if approved, would be the largest foreign investment in the country's upstream oil resources since nationalisation of the sector in the 1970s.

A number of projects are also in the pipeline to raise production at oilfields in south and southeast Kuwait, Oun said. State-owned Kuwait Oil Tanker Company this year signed contracts to build seven oil tankers of different sizes to modernise its fleet at cost of more than $600mn.

The emirate is planning to build a new refinery with a capacity of up to 600,000bpd at a cost of $6.3bn. It is scheduled to be onstream in 2010.

It also plans to upgrade two of three existing refineries at a cost of between three to $4bn. The third refinery at Shuaiba will be closed down when the projects are completed in 2011.

That will boost Kuwait's refinery capacity from 920,000bpd now to 1.2mn bpd.

A number of giant petrochemicals plants, at an estimated cost of around $10bn, are under establishment with the help of foreign companies, led by the US Dow Chemical, Oun said.

In addition, Kuwait on Monday signed a memorandum of understanding with China to build a refining and petrochemicals complex in the Asian giant at a cost of $5bn. It will be completed in 2010. It has also offered to build a modern refinery in the US at an estimated cost of around $10bn.– AFP