Great news for industry after many years of waiting and explorations
Finally 72 years after the first cargo shipment of Kuwait Export Crude (KEC), Kuwait will begin exporting its super light crude oil with 48 API to the world from the end of this month. So far, Kuwait was producing just one type of oil with 31 API and 2.5 percent Sulfur. Now it will be able to export a much lighter type, which commands a premium of over $5 to $6 per barrel, or equivalent to the current Brent price of $76 per barrel. We will be producing 130,000 barrels from now on, which will increase to 300,000 barrels by the end of 2025.
All of these are being produced from the northern oil fields. It goes back to the discovery of free gas, and along with the discovery of the light type crude. Kuwait was the only oil country that was stuck with one type of crude oil, and now it has added another type. Its quality is next to the Algerian Sahara blend and the Malaysian Tipas type which are in the same range or API of Kuwaiti super light crude. This will open new markets for Kuwait’s oil industry. It can now seek customers in need of light crude oil and products like gasoline and Naphtha for Petchem industry.
A volume of 130,000 barrels is small but it will give customers the flexibility to blend with heavier type of oil or it can be blended with Kuwaiti crude depending on the customers’ needs, wants and flexibility. For years Kuwait was trying to segregate its sour type of crude from light crudes, but for some reason it never did. Or perhaps because of the volume, reserve and rate of recovery, it didn’t justify the economics of segregation, construction of segregated pipelines, storage tanks and independent facility to exclusively handle the light crudes from the north.
The first shipment of Kuwait’s super light crude will be heading to Asia, simply because of higher net back against the west with ample supply of sweet type of crude in the USA with its shale oils. This could be the beginning of more things to come like more free gas production and further exploration for lighter crude oil, which will also give our refineries more flexibility. It is great news for Kuwait’s oil industry after many years of waiting and explorations. It also means more income and revenues for the state treasury, as well as more challenges to come after this success, with hopes for more positive news. Congratulations to Kuwait for joining the super light league and achieving a little bit more flexibility in its industry. It will no longer be labeled as the sole supplier of one type of crude oil.
By Kamel Al-Harami Independent Oil Analyst