Climate risks push Kuwait to consider lower oil-capacity targets

Kuwait, OPEC’s fourth-biggest member, is considering cuts to its oil production capacity targets, in large part because mounting concern about climate change will constrict demand for fossil fuels.

Kuwait Petroleum Corp. may reduce its long-standing goal of reaching four million barrels of daily capacity by 2020 to 3.125 million barrels, according to a person with direct knowledge of the discussions. The state-owned producer’s current capacity is about three million.

Such a change would be a rare acknowledgment by a member of the Organization of Petroleum Exporting Countries that environmental issues are influencing producers’ strategies. While most analysts expect the world to keep consuming oil for decades to come, the debate among them now is when, rather than if, demand will stop growing at all.

KPC may also cut its 2040 capacity target to four million barrels a day, from 4.75 million, the person said, asking not to be identified because the discussions are private. All the proposed changes, which are also being driven partly by delays in projects, require government approval.

Media officials at KPC didn’t immediately respond to a request for comment.

The company is reviewing its capital expenditure program valued at about $500bn, according to the person with knowledge of the matter. Kuwait has had to delay projects, including some using water injection to produce oil, and this adds to the challenge of meeting its existing capacity targets, the person said.

Kuwait is already limiting its actual production as part of a 2016 pact between OPEC and allied suppliers to drain a global glut. The nation’s output peaked at 2.96 million barrels a day that year and was most recently at 2.69 million, data compiled by Bloomberg show.

The country’s capacity targets include a share of fields in the so-called Neutral Zone shared with Saudi Arabia. Production there has been halted for at least four years, partly due to disputes between the neighbours, but these fields can produce as much as 500,000 barrels a day.