Parliament demands answers on reserves and Project Kuwait
Posted: 07 August 2006
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The newly appointed Energy Minister for Kuwait was in the spotlight to finally clarify just how big the country's oil reserves are, reports the August issue of Pipeline Magazine.
 Sheikh Ali Al-Jarrah Al-Sabah, a 56-year-old former banker and diplomat, was given the energy portfolio in a new cabinet named by the Emir last month.
He immediately faced challenges from Kuwait's parliamentary opposition over the proposed opening of the oil sector to foreigners combined with calls for an accurate figure for Kuwait's oil reserves following reports early this year that they had been wildly overstated.
Back in January, an industry newsletter said it had seen internal Kuwaiti records, including 2001 Kuwait Oil Company reports, showing reserves were about 48 billion barrels "half the officially stated 99 billion, or some 10% of global oil reserves. These suggested that official figures include proven, non-proven and possible, with no distinction between the three.
The government argued that the reports are partial and do not show the full picture. But the issue was taken up by opposition members of the Kuwait parliament, seeking greater oversight of the country's oil sector.
They proposed a bill that would see production levels fixed as a percentage of reserves, a demand which would require full transparency on the exact reserve base. Although the bill is unlikely to get off the ground, the Kuwait Oil Company is drafting a document to lay out reserve figures in more detail and almost certainly reinforce the 99 billion barrel estimate.
The size of future available resources, could have an impact on the viability of Kuwait's current development plans.
Kuwait's long term hope is to lift production to four million barrels a day, from levels of around 2.7 million. But the long-delayed $8.5 billion North Fields development, that represents a substantial part of that increase, remains to be sanctioned by parliament. Parliament's role in what is known as the Project Kuwait development will provide members with greater weight in the months ahead.
Immediately on his appointment, the new minister faced demands for the facts on the real size of the reserves. Jassem Al-Saadoun, head of Kuwaiti financial analysts and think tank Al-Shall, said: "The oil reserves figure should not be a secret "it's a right for the whole world to know."
Shortly after, in his first public statement since taking office, Sheikh Ali said he would clarify Kuwait's actual oil reserves. In a statement on the Kuwait Oil Ministry website, Sheikh Ali said he had "undertaken to clarify the truth and volume of Kuwaiti oil reserves."
The statement added that the issue was a very significant matter and soon the volume and truth of oil reserves will be announced based on clear scientific studies, characterised by reality and credibility and supported by international documents and certificates."
Like his predecessor the new minister strongly backs Project Kuwait, which involves consortia led by BP, Chevron and ExxonMobil.
Parliamentarians remain to be convinced on how tax revenues - which currently make by 40% of the economy - from future production will be used.
Sheikh Ali said: "I am confident that this strategy was only approved for the interests of Kuwait and there is nothing proposed in the plan that undermines Kuwait." He said the upgrading of the North Fields did not mean their exhaustion but developed their efficiency."
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