Kuwaiti oil output is divided about equally between shallow wells and high-pressure wells producing up to 10,000 bbl/d each from the deep, "Marrat" structure which runs north-south through the country and contains an estimated 20 billion barrels of oil in place. The bulk of Kuwaits oil production capacity is located in the southeastern onshore Greater Burgan field, whose Burgan, Magwa, and Ahmadi structures have production capacity of around 1.6 million bbl/d. Kuwaits other main producing fields include the northern fields of Raudhatain (220,000 bbl/d of production capacity, with higher "surge" capacity) and Sabriya (95,000 bbl/d of production capacity, with plans to raise this to 200,000 bbl/d); the southwestern fields of Minagish and Umm Qudayr (200,000 bbl/d); Abdali, Bahra and Ratqa (50,000 bbl/d) in the north; and Kuwaits share of the Saudi-Kuwaiti Neutral Zone (270,000 bbl/d). Overall, around two-thirds of Kuwaiti oil production comes from the southeast of the country, with about one-fifth from northern Kuwait and about one-tenth from the west. On January 31, 2002, an explosion and fire at an oil-gathering center near Kuwaits northern Raudhatain oil field killed four workers and injured seventeen, while cutting the fields oil and gas output sharply. The explosion, which reportedly was caused by a leak at a major oil pipeline, knocked out three critical gathering centers (the 280,000-bbl/d GC-15, 120,000-bbl/d GC-23, and 200,000-bbl/d GC-25), an electrical substation, and a natural gas booster station (BS-130). Production at Raudhatain was quickly restored to around 300,000 bbl/d by the end of February 2002, but further repairs were required on GC-15 to restore the rest. The facility reopened in January 2005, with repairs costing around $250 million. SK Corporation of South Korea was awarded a contract in May 2005 for construction of ten additional gathering centers, as well as other associated infrastructure. The $1.2 billion project is scheduled for completion in mid-2007.
Kuwait continues to plan for significant expansion in its production capacity. Kuwait hopes to reach capacity of 4 million bbl/d by 2020, up from around 2.5 million bbl/d at present. As part of this plan, known as "Project Kuwait," Kuwait is considering permitting foreign oil companies to invest in upstream production, although only on "incentivised buy-back contract" (IBBC) arrangements, which do not involve production sharing, concessions, or the "booking" of reserves by foreign companies. Kuwaits constitution -- and longtime policy -- bars foreign investment in the countrys natural resources, except as provided for by law. Unlike PSAs, the structure of the IBBC agreements allows the Kuwaiti government to retain full ownership of oil reserves, control over oil production levels, and strategic management of the ventures. Foreign firms are to be paid a "per barrel" fee, along with allowances for capital recovery and incentive fees for increasing reserves, in their role as service provider/contractor.
"Project Kuwait" is a $7 billion, 25-year plan, first formulated in 1997 by the SPC, to increase the countrys oil production (and to help compensate for declines at the mature Burgan field), with the help of international oil companies (IOCs). In particular, Kuwait aims to increase output at five northern oil fields -- Abdali, Bahra, Ratqa, Raudhatain, and Sabriya (Kuwaits third largest field) -- from their current rate of around 650,000 bbl/d to 900,000 bbl/d within three years. Project Kuwait has been repeatedly delayed, however, due to political opposition and resistance from nationalists and Islamists in parliament to the idea of allowing foreign companies into the countrys oil sector. Legislation which would facilitate Project Kuwait has been introduced again in the Kuwaiti parliament in early 2005. The bill was approved by the Finance and Economic Committee in June 2005, but with amendments limiting its scope to four of the five fields, excluding Bahra. Final action on the bill by the full parliament is still pending, but is expected by the end of 2005. In February 2003, KPC completed a draft contract and proposed financial terms for Project Kuwait. There are three major consortia competing for the project, led by: 1) ChevronTexaco (along with Total, PetroCanada, Sibneft and Sinopec); 2) ExxonMobil (along with Shell, ConocoPhillips, and Maersk); and 3) BP (along with Occidental, ONGC/Indian Oil Corp.). Reportedly, KPC prefers to have three groups working under three separate IBBCs: one for Raudhatain and Sabriya (the largest IBBC); one for Ratqa, Bahra and Abdali; and one for Minagish and Umm Gudair. Currently, foreign companies like BP, Shell, and ChevronTexaco operate in Kuwait strictly under service contracts (SCs).
The fields which the Kuwaiti government intends to open to foreign investment are all currently operating fields in northern or western Kuwait, including Raudhatain, Sabriya, Ratqa, Bahra, Minagish, and Umm Gudair. Kuwaits largest field, Burgan, is to remain off-limits to foreign investment under the new plan. Kuwait also reportedly is planning to invest $6 billion in three areas near the Iraqi border -- Abdali, Ratqa, and Raudhatain -- while utilizing enhanced oil recovery (EOR) techniques in order to increase production capacity at Minagish from 150,000 bbl/d to 250,000 bbl/d. One challenge that often comes along with EOR techniques like water injection is an increasing "water cut." KPC has estimated that increasing Kuwait output to 4 million bbl/d will produce 10 million bbl/d of water, which will need to be processed and disposed of. Kuwaits current policy, in place since 1975, limits the participation of foreign oil companies to providing technical assistance and construction and maintenance services under contracts, which pay them fixed prices for specific activities. In fact, Kuwaits constitution forbids the award of concessions which give an ownership interest in Kuwaits natural resources to foreign entities. Nevertheless, the government has repeatedly hinted at a desire to find a way to involve foreign oil companies in increasing production without violating the constitution.