BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Oil & Gas Sector Of Kuwait

The latest Kuwait Oil & Gas Report from BMI forecasts that the country will account for 2.54% of MEA regional oil demand by 2010, while providing 7.34% of supply. MEA regional oil demand rose to 10.7mn barrels per day (b/d) last year and should average 10.9mn b/d in 2006, before reaching 12.2mn b/d by 2010. MEA gas consumption in 2005 was 343bcm, with demand of 533bcm targeted for 2010. Production last year of 448bcm should reach 774bcm by the end of the decade. Kuwait's share of consumption in 2005 was 2.92%, while its contribution to production was 2.23%. By 2010, its share of demand is forecast to be 3.94%, with the country accounting for 1.94% of supply.

Assuming an uneventful Q4, we are now predicting an OPEC basket price for 2006 averaging US$61.10/bbl – an increase of US$1.10 from our June forecast. This also represents a 19% rise from the FY05 average. Our forecasts for the US, Brent and Urals are US$66.40, US$65.40 and US$61.60/bbl respectively. For 2007, we continue to assume an OPEC basket price of US$50/bbl, which implies US$55.40 for the US, US$53.40 for Brent and US$49.50 for Urals. Prices are then forecast to fall by around US$5/bbl in 2008-2010, with the OPEC price averaging US$45/bbl over the period.

Kuwaiti real GDP growth is now forecast by BMI at 5.5% for 2006, following 4.0% in 2005. We are assuming 6.0% growth in 2007 and 5.0% in 2008, followed by 4.5% in 2009 and 2.2% in 2010. We expect oil demand to rise from 280,000b/d last year to 309,000b/d in 2010, lagging the underlying rate of economic expansion. State oil company Kuwait Petroleum Co (KPC) is responsible for all domestic oil and gas operations. International oil company (IOC) involvement could begin with the Project Kuwait initiative aimed at bringing foreign companies into Kuwait as sub-contractors. In spite of the absence of near-term IOC investment, crude production is forecast to increase from 2.64mn b/d in 2005 to 2.85mn b/d in 2010, subject to OPEC quotas. Gas production should reach 15bcm by 2010, up from 9.7bcm last year. Consumption is expected to rise from 9.7bcm to 21bcm by the end of the forecast period, requiring imports of 6bcm.

In the BMI Business Environment Ranking matrix, Kuwait this quarter receives a lower composite score of 30, demoting the Gulf state to 12th out of 16 countries included in the MEA region. Kuwait's overall business environment can be considered unattractive in a regional context, in spite of a low level of perceived economic risk and the country's abundant oil and gas resources. It is let down by state control of the oil and gas sector, with limited access for IOCs.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Kuwait Political SWOT

Kuwait Economic SWOT

Kuwait Business Environment Industry SWOT

Chapter 3 - Regional Market Overview

Middle East/Africa Region

Table: MEA Oil Consumption (000b/d)

Table: Middle East/Africa Oil Production (000b/d)

Table: Middle East/Africa Oil Refining

Table: Middle East/Africa Gas Consumption

Table: Middle East/Africa Gas Production (bcm)

Table: Middle East/Africa LNG Exports/(Imports) (bcm)

Kuwait

Chapter 4 - Business Environment Rankings

Kuwait

Middle East/Africa Region

Chapter 5 - Kuwait Business Environment Ranking

Economics – long-term risk

Politics – long-term risk

Oil & Gas Growth

Oil/Gas Reserves

Licensing/Regulation

Competitive Environment

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Code/Corruption

Foreign Direct Investment

Tax Regime

Chapter 6 - Oil Market Outlook

Table: Crude Price Forecasts 2006

Revised Forecasts

Table: Oil Price Forecasts

Chapter 7 - Regional Supply and Demand

Middle East/Africa

Table: Middle East/Africa Oil Production (000b/d)

Table: Oil Consumption (000b/d) – Middle East/Africa

Chapter 8 - Global Picture

Table: Global Oil Consumption (000b/d)

Table: Global Oil Production (000b/d)

Chapter 9 - Industry Forecast Scenario

Oil and Gas Reserves

Oil Supply and Demand

Gas Supply and Demand

Refining and Oil Products Trade

Revenues/Import Costs

Table 14: Kuwait Oil & Gas – Historic Data & Forecasts

Other Energy

Table: Kuwait Other Energy – Historic Data & Forecasts

Key Risks to - BMI’s Forecast Scenario

Chapter 10 - Economic Outlook

Table: Economic Activity

Chapter 11 - Country Snapshot: Kuwait Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 12 - Regional Case Study

Global Player With Conflicting Domestic Needs

Chapter 13 - Competitive Landscape

Executive Summary

Table: Key Players – Kuwaiti Oil & Gas Sector

Overview/State Role

Table: Key Upstream Player

Table 19: Key Downstream Player

Chapter 14 - Company Monitor

Kuwait Petroleum Corporation (KPC)

Kuwait National Petroleum Company (KNPC)

Chapter 15 - BMI Forecast Modelling

How we generate our industry forecasts

Energy Industry

Cross checks

Sources

Chapter 16 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Network of Middle Eastern and African Oil and Gas Sources

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BMI's Middle Eastern and African Oil and Gas Reports are based on an extensive network of multilateral organisations, government departments, oil and gas industry associations, chambers of commerce and company reports. Information sources include: