15/01/2012

For some time now and on several occasions it has been quoted by Kuwaiti officials that Kuwait is producing three million barrels of oil per day. We may produce at the stated level, but we know that such a level of production is unsustainable, as our sustainable production level should not exceed 2.7 million barrels a day. So we shouldn't be too optimistic about the three million barrels on every occasion. Instead we should be looking at ways of enhancing returns on our crude value and improving its price. Here lies the challenge for our Kuwaiti oil industry.

We should be doing something to improve its added value by selling it at a higher than current price which is 10 US cents below Arab Medium. It is wrong to sell our Kuwait Export Crude (KEC) below the Saudi Arab Medium crude, as both crudes are equal in equity and its API. Now comes the challenge - at this particular time.

Since Kuwait nationalized its oil industry in 1975, KEC was being sold in parity with the Saudi Arabia crude oil and this has been widely known for many years. Recently there was a shift in crude oil selling policy by discounting it by 10 cents for some unknown reason. It could well be that Kuwait was unable to sell its crude oil volume or that it was just mere slackness. Or worst still - that nobody cared.

Today however with fresh faces running the International Marketing Department in Kuwait Petroleum Corporation (KPC), their approach should change - stressing on the importance of bringing KEC back to parity with Arab Medium crude oil. The 10 cent discount per barrel equates to daily losses between two to three million US dollars per day. This is not financial income that we should ignore. We should strive to get every cent for our crude oil with today's market situation being described as the 'seller's market'.

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Kamel Al-Harami - Al Watan