Petro-dollars roll into Kuwait’s multi-billion projects

Dec 28, 2004 01:00 AM

Buoyed by its stable security situation and highest income in three decades, Kuwait is on a spending spree, pumping dozens of billions of dollars into giant projects. Top oil executives said they plan to spend up to $ 40 bn over the next 15 years to modernize the emirate's oil industry, which provides 90 % of public revenue.
A large number of mega civil projects, costing billions of dollars, are in the pipeline, including a $ 1.2 bn state-of-the-art container port to cope with an expected high demand from neighbouring Iraq.

For the first time in 13 years, the oil-rich emirate was able to breathe a sigh of relief in April last year with the ouster of Iraqi President Saddam Hussein, who in August 1990 ordered his army to invade Kuwait. Saddam's fall was coupled with Kuwait enjoying the most optimistic economic indicators since the first oil boom in the 1970s, boasting some $ 21.5 bn of surplus in five consecutive fiscal years since 1999/2000.
The emirate is set for its highest income in 30years in the fiscal year that ends on March 31, 2005, with economic reports predicting a surplus of more than $ 10 bn.

Kuwait appears to have succeeded in rebuilding its very large foreign assets, which sharply depleted to meet the costs of the 1991 Gulf War to liberate it from Iraqi occupation and due to post-liberation reconstruction. The figure has since returned close to pre-invasion levels of around $ 100 bn.
The CEO of the national oil conglomerate Kuwait Petroleum Corporation (KPC), Hani Hussein, said earlier that a large number of projects will be carried out to raise output capacity to 4 mm bpd in 2020 from the current 2.5 mm. Those projects, to be implemented with the assistance of foreign oil majors, are expected to cost some $ 20 bn, Hussein said.

A one-billion-dollar project to modernize export terminals and boost their capacity is in the final stages of the bidding process. Another project to build the emirate's fourth refinery will cost between three to $ 4 bn.
Kuwait also plans two major petrochemical projects at a cost of some $ 3 bn in cooperation with a foreign partner and the domestic private sector, Hussein said. A project to build a 25 km causeway linking Subbiya in the north to Kuwait City at a cost of $ 1.5 bn is in the final stages of pre-qualifying contractors. Construction on the project, known as Sheikh Jaber al-Ahmad Causeway after Kuwait's emir, is slated to begin at the end of 2005 and will take five years to complete.

Bids are also being reviewed for a two-billion-dollar project to develop Failaka Island, 20 km east of Kuwait City, to set up major entertainment facilities. Kuwait, which has a population of 2.6 mm, is also looking to boost its transport field. Besides Bubiyan Port, off the country's northern coast near Iraq and Iran, which is due to start operations in early 2008, major road and railway projects are planned.
Work on two main 250 km “regional” roads, linking Iraq to both Bubiyan Port and Saudi Arabia, is expected to commence in 2005 at a cost ofclose to $ 1 bn. A domestic railway network as part of a five-billion-dollar Gulf rail link and an underground metro-line are also under serious consideration. Both projects have a combined cost of $ 2 bn.

Source: Monday Morning
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