Kuwait to speed up petrochemical project after oil merger

A long-delayed $10 billion petrochemicals project in Kuwait should get the boost it needs after two state-owned downstream oil companies were merged.

The move is part of a broader overhaul of the Gulf state’s energy sector, an industry analyst said.

Kuwait Integrated Petroleum Industries Company (KIPIC) was dissolved and merged into the bigger Kuwait National Petroleum Company (KNPC) as part of plans approved by the government two years ago to restructure the oil sector.

The overhaul, which affects eight operating public oil entities, is intended to cut costs, improve performance and upgrade efficiency, the oil ministry said last year.

KIPIC had managed the Al Zour project, which includes a $16 billion refinery with a capacity of 615,000 barrels per day and a planned petrochemical complex. The refinery was fully commissioned in early 2024 while the petrochemical project has remained on hold to determine its exact costs and feasibility.

“Accelerating the integrated petrochemical complex project linked to the Al Zour refinery is a significant strategic step that reflects a clear path towards maximising the added value of Kuwait’s oil sector and shifting from a focus on exporting raw materials to expanding into more profitable and sustainable downstream industries,” said Ali Al-Anzi, manager of the Kuwaiti-based Al-Manakh economic consulting centre.

The complex, which has an estimated cost of $10 billion, will produce nearly 2.7 million tonnes per year of aromatics and polypropylene and 1.7 million tonnes of petrol, providing inputs to fuel the development of local manufacturing industries, KIPIC said.

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The Kuwait Petroleum Corporation, which manages the country’s hydrocarbon industry, reported last year that the project is expected to be broken up into three main packages and that it would boost Kuwait’s revenues.

Oil minister Tariq Al-Roumi said in September last year that the complex would support Kuwait’s target to produce 14.5 million tonnes of petrochemicals by 2040 as part of a long-term drive to lessen reliance on volatile crude oil sales.

Kuwait has nearly 101 billion barrels of proven oil deposits but is currently locked out of the global hydrocarbon market due to the effective closure of the Strait of Hormuz by Iran, which resumed missile attacks on the emirate on Tuesday following US strikes on Qeshm Island.