With Oil Fields In Decline, Kuwait Considers Inviting In Foreign Capital

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KUWAIT CITY – Like many Arab Gulf nations, Kuwait relies heavily on imported labor and expertise. From street cleaners to construction workers, Kuwait regularly imports knowledge, skills, and workers from abroad. Kuwait's energy sector, however, has always been sacrosanct. The country's natural heritage has been solely in the hands of Kuwaiti companies since the government nationalized the oil industry in the 1970s. Foreign energy companies continued to play a role but served only as hired hands.

Now with some of the country's most precious oil fields quickly becoming exhausted, Kuwait is considering throwing open the doors and handing over power - albeit limited - to foreign oil companies that have the technical know-how to help stretch what remains and develop what's yet to be discovered.

Project Kuwait, a controversial $8.5 billion plan before the country's parliament, would allow - for the first time in 34 years - international oil companies (IOCs) power over Kuwait's oil production levels, which are currently about 2.4 million barrels per day. It would also give the oil giants much greater influence over global oil supplies and pricing once they regained a foothold in this country, believed to have about 10 percent of the world's oil reserves.

But while global energy executives may be eager to begin drilling under the Kuwaiti desert, many here don't want to relinquish any national control of the lucrative oil fields even if it means potentially losing billions of dollars. If Kuwait allows foreign majors back in, it will be laying the groundwork for long-term dependence on outside help, says Peter Zeihan, senior analyst with Strategic Forecasting, a geopolitical intelligence agency in Austin, Texas. Kuwait will be "making itself hostage to international oil companies," he says.


EDIT

http://www.csmonitor.com/2006/0316/p07s02-wome.html

[phantom power]

1. If I wasn't such a Pollyanna, news like this would worry me.