Sunday 10 / November / 2024
Dubai: Kuwait’s crude production tumbled by 60 per cent and its refineries scaled back operations as the state oil company took emergency measures to cope with the first day of an open-ended labor strike.
The Opec member’s production dropped to 1.1 million barrels a day, Saad Al Azmi, deputy chief executive for finance and spokesman at Kuwait Oil Co. (KOC), said in posts on Instagram and Twitter on Sunday when workers walked off the job. Kuwait Petroleum Corp., the parent company for KOC and other operating units, will continue providing fuel to the local market and can meet demand from international customers for exports, it said on Twitter.
Kuwait is among Middle Eastern oil producers that are cutting spending and benefits to plug holes that the oil-price drop of nearly 30 per cent in the past year has punched in government budgets. Prices have fallen as rising output from the Organisation of Petroleum Exporting Countries (Opec) and other suppliers has created a global glut. Kuwait produced 2.81 million barrels a day last month, making it Opec’s fourth-largest member, while worldwide supply exceeded demand by 1.6 million in the first quarter, according to the International Energy Agency (IEA).
‘Shocking’ decline
The plunge in Kuwait’s output "is just shocking,” Edward Bell, a commodities analyst at Dubai-based bank Emirates NBD PJSC, said Sunday by phone. "That would take care of the surplus right there. There could be quite a bit of upside in oil tomorrow.”
Oil ministers from producing countries such as Saudi Arabia, Opec’s largest member, and Russia are meeting in Doha on Sunday to discuss a proposal to freeze oil output to help prop up prices. Brent crude closed at $43.10 a barrel Friday, posting gains of about 25 per cent since the freeze was proposed in mid-February. News of a possible deal from that meeting could be overshadowed by the impact of Kuwait’s reduced production, Bell said.
Kuwait’s oil and gas refineries are processing 520,000 barrels a day of crude, said Khaled Al Asousi, spokesman for Kuwait National Petroleum Co. The state-owned refinery unit reduced processing rates at the country’s three oil plants, which have a combined capacity of about 900,000 barrels a day, due to emergency measures and because less supply is available from KOC, he said.
Members of the 13,000-strong Oil & Petrochemical Industries Workers Confederation are protesting cuts in their wages and benefits, Saif Al Qahtani, the union’s leader, said by phone Thursday. About 6,000 workers walked off the job when the strike began Sunday, CNBC Arabiya cited him as saying. Union officials couldn’t be reached for comment on Sunday.
Natural gas production stood at 620 million standard cubic feet a day, Al Azmi said. Kuwait’s refineries process crude into refined products such as gasoline, diesel and jet fuel for domestic use and export.
Negotiations with the strikers were continuing, Mohammed Al Shatti, Kuwait’s representative to Opec, said in Doha.
