According to the most recent data, the nation had a surplus of 6.4 billion Kuwaiti dinars ($20.86 billion) at the end of its fiscal year on March 31.

Over the course of a year, Kuwait brought in 28.8 billion dinars, a 54.7 per cent increase over the previous year.

Oil revenue increased by 64.7% over the previous year, accounting for nearly 93% of the government’s total income of 26.71 billion dinars. Throughout the fiscal year, the average price of oil was $97.1 a barrel.

According to the ministry, total spending was 22.37 billion dinars, which is 2.6 per cent less than it was a year earlier.

According to Kuwait’s Minister of Oil Saad Hamad Nasser Al-Barrak, “Kuwait enjoys a strong financial position, considerable reserves, and monetary and financial stability, all of which insulate us from the short-term repercussions of oil market swings.”

The minister made his remarks only a few weeks after promising to invest more than $300 billion in the nation’s energy sector by 2040.

According to figures from the ministry, the emirate’s daily production rate for the fiscal year that ended on March 31 reached 2.693 million barrels, or almost 7% of the world’s reserves.

Its budget has consistently had deficits since the collapse of oil prices in 2014. However, Kuwait experienced a recovery as a result of the rise in oil prices following the conflict in Ukraine.

According to a local newspaper earlier this month, which cited a member of parliament, the country’s draft budget for the upcoming fiscal year predicted a deficit of 6.8 billion dinars due to reduced oil prices and volumes.

According to a report from Al-Dustor posted by the parliament’s Twitter account and citing MP Osama Al-Zaid, the proposed budget for the fiscal year beginning April 1 projected oil revenue of 17 billion dinars, down 19.5% from 2022-2023.

According to Al-Zaid, the draft budget was based on an oil price of $70 per barrel.

Despite moving more slowly than its Gulf neighbours in terms of diversifying its sources of income, Kuwait has cooperated with production cuts mandated by the Organization of the Petroleum Exporting Countries and its allies led by Russia.

Fiscal reform in the OPEC member state has been impeded for years by disputes between successive appointed governments and elected parliaments, including a debt law that would enable Kuwait to access international markets and reduce its heavy reliance on oil, according to Reuters.

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It is reported that the deals will be inked with local companies – Burgan Wells Drilling and Kuwaiti Drilling Company – and seven other international firms represented by Chinese company Sinopec, Jerry, Aleph, Egyptian company Sino Tharwa Drilling and Schlumberger. The contracts are expected to be valid for five years.

Recently, Saudi Arabia-led Organisation of the Petroleum Exporting Countries (OPEC) and its partners agreed to raise their collective production by 0.5 million bpd in January.  The decision to whether cut or raise production for the months preceding January will be taken later.

OPEC’s decision to raise production in January could be based on the successful trial of coronavirus vaccines and a worldwide rapid immunisation programme could lead to increasing demand for oil prices.

According to OPEC, demand for crude oil will increase by a record of 7 barrels of oil per day. OPEC expects the global economy and the oil market to recover from the Covid-19 crisis next year, however, it would stay below 2019 levels.

Recently, Saudi Arabia-based state oil giant Aramco raised the January price for its Arab light crude to Asia to $0.30 a barrel over Oman/Dubai crude, up $0.80 from December.

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Oil Minister Khaled Al Fadhel said Kuwait has cut its own production output by a percentage more than necessary to effectively achieve the objective. “The compliance of Kuwait was close to 160% last July, ” he told a local news agency. 

Crucially, in the current situation it is important to stop inventories from excess oil production resulting in falling prices. 

Despite excess production, oil prices increased slightly on Monday. This could be as a result of US-China trade war and anticipation that global suppliers would reduce production in crude, analysts said. International benchmark Brent Crude futures at $58.75 a barrel, an increase of 22 cents from the previous settlement. 

However, Al Fadhel said fears of global economic downturn largely impacting crude prices are ‘exaggerated’. That said, crude demand globally should pick up pace in the second half of the year, while simultaneously reducing excess in oil inventories. 

“What we have noticed recently is a different perception of risk in different geographies,” Emily Ashford, executive director of energy research at Standard Chartered said. “Often the price reactions during Asia or London trading are reversed during US trading. Prices seem to be following that pattern today.”

Opec, Russia and other non-Opec producers agreed to cut output by 1.2 million barrels per day effective January 1 for six months. 

Analysts believe that more output reductions are required to support prices. This is mainly because several forecasters and governments predict a slowdown in oil demand growth and  global economy on the whole. 

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There are several oil fields in the bordering area of the two countries. ERC Equipoise will study the Rumaila South, Rataqa and Safwan Al Abdali oil fields.

The agreement was signed by Kuwaiti Ministry of Oil Sheikh Talal Nasser Al-Sabah and the Iraqi Oil Ministry’s petroleum contracts and licencing directorate chief Abdul Mahdi Al -Ameedi in the Jordanian capital of Amman.

Abdul Mahdi Al-Ameedi told the media that, “ERC Equipoise will provide us with all information related to oil reserves and other information, which paves the way for joint investment between Iraq and Kuwait.”

His counterpart, Sheikh Talal Nasser Al-Sabah said that the agreement was the result of six years of hard work between the two nations.

The agreement also intends to improve the relationship between the two countries, especially when it comes to joint oil production.

Both countries are members of the Organization of the Petroleum Exporting Countries. Tensions between the two nations have long escalated with regards to production from cross-border oil fields. Prior to Iraq’s invasion of Kuwait in 1990, Iraq accused Kuwait of drilling wells and pumping oil in Iraqi territory. However, Kuwait denied the allegation.

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The contract is for a three-year term with a six-month extension option. The tender saw participation from three global companies but Halliburton emerged as the winner, according to the Kuwait Times.

According to the deal, Kuwait Oil will receive integrated offshore drilling services for six high-pressure high-temperature (HPHT) exploration wells on two jack-up rigs in the Arabian Gulf.

The deal is expected to help produce 100,000 barrels of oil each day.

Kuwait Oil will receive offshore rigs and supply vessels for the project from the American company. They will also receive drilling, coring, cementing, wireline and perforating as well as offshore logistical services.

According to Halliburton’s website, the project will be operational in mid-2020, while work on each rig is expected to begin by July 2020 and January 2021 respectively.

Kuwait Oil CEO Emad Al-Sultan told the media that with the new deal, their aim is to increase Kuwait’s crude oil production.

Earlier in June, the Kuwait Oil Company awarded two contracts worth $96 million for the construction of two substation power plants.

While Kuwait-based engineering, procurement, and construction contractor Al-Ghanim International landed the first contract worth $53.8 million, the second contract worth $42 million went to Heavy Engineering and Industries Company.

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