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OPEC’s fourth-largest producer currently, Kuwait, may revise down its long-term oil capacity production targets due to concerns that environmental risks will limit oil demand growth, in what would be a first acknowledgement from an OPEC member that climate change could stifle oil demand.
State-owned Kuwait Petroleum Corporation (KPC) is considering lowering its oil production capacity goal of 4.75 million bpd by 2040 to 4 million bpd, Bloomberg has reported, citing a source with direct knowledge of talks about revision of targets. The company is also mulling over reducing its 2020 capacity target of 4 million bpd to 3.125 million bpd.
Two years ago, Kuwait announced plans to increase its crude oil production capacity to 4.75 million bpd by 2040, compared to a current capacity of 3 million bpd.
In early 2018, KPC said that it would spend around US$500 billion by 2040 to boost the Arab Gulf state’s oil production capacity. KPC’s chief executive officer Nizar al-Adsani said in January 2018 that KPC expected to spend US$114 billion over the following five years and another US$394 billion after the five-year period through 2040.
In April this year, Kuwait said it would start in 2019 the first phase of a heavy oil field production, aiming to boost heavy crude output to 430,000 bpd from 60,000 bpd by January 2019.
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According to Bloomberg, the revision of the targets is now prompted by concerns over long-term global oil demand in view of environmental risks, as well as by delays in some upstream projects.
Kuwait is currently the fourth-largest oil producer in OPEC, behind Saudi Arabia, Iraq, and the United Arab Emirates (UAE), and ahead of Iran, whose oil production is currently heavily constrained by the U.S. sanctions. Kuwait pumped 2.66 million bpd of oil in September 2019, according to OPEC’s secondary sources.
“This change in targets by an OPEC member would be the first to be based on environmental issues,” said Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, at IHS Markit.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.