The huge oil field that a country has on top… or the country that has a huge oil field underneath. Either structure is correct, and is not untrue. In the world of oil there are many curious stories related to geology and technology, but without a doubt the story of Kuwait is extremely peculiar. There are few pieces of land in the world with so much oil underneath. Kuwait is one of the smallest countries in Asia (it is a little larger than Murcia), but with the second largest conventional crude oil field in the world (Burgan oilfield), only behind the Ghawar field, in Saudi Arabia. As if that were not enough, this field is surrounded by other less important oil and gas fields. Despite all this wealth, Kuwait faces economic recession which has lasted two years in a row. Paradoxically, this recession is a consequence of the oil itself (the economy is sinking in its own crude oil) that has given this country so much joy. The fall in the price of crude oil and the cuts by the Organization of the Petroleum Exporting Countries (OPEC) are condemning the economy of this country that, to date, has done little to diversify its economy. To better understand the reason for this dependence on crude oil, it is interesting to analyze the great Burgan site and the geology of this country that ‘floats’ in crude oil.
Located between Saudi Arabia and Iraq, Kuwait has the seventh largest oil reserves in the worlda quantity of crude oil that could also be increased soon after a new discovery made a few months ago. Kuwait is located on top of the second largest oil field in the world (the operation of this immense field is discussed in depth below), an accumulation of crude oil that has made Kuwait one of the countries with the highest GDP per capita in the world.
But not content with that, Kuwait Petroleum Corporation (KPC) continues to explore and invest to get the most out of each field and those yet to come. The objective is to go from 2.9 million barrels per day (Kuwait’s current production) to the 4 million it aims for in the coming years. In a recent interview, Sheikh Nawaf Al-Sabah, CEO of KPC. But not only that, the state oil company is working to increase its production by 50% in a few years. (KPC), pointed out that they intend to invest 30,000 million until 2035 to achieve these objectives. But not only that, the state oil company is working to increase its production by 50% in a few years.
A good example of these efforts is the recent discovery of a new high-quality light oil and gas field in the offshore Noukhada field, east of Failaka Island, in Kuwait’s economic waters. Although the first data were encouraging, the information provided was somewhat erratic. However, over the last few months, certain information has been revealed that completes the photograph of this new discovery. Thanks to this oil, Kuwait’s crude oil reserves will easily exceed 100 billion barrels of crude oil. Although Guyana holds the record for oil production per capita, Kuwait holds the record for oil under its soil per capita, with almost 24,000 barrels of crude oil for each inhabitant.
The great Burgan site
However, although new discoveries always add up, the oil heart of Kuwait has names and surnames. The site Burgan Field, discovered in 1938 by the Kuwait Oil Company, is the second largest oil field in the world, only surpassed by the Ghawar Field in Saudi Arabia. Since its discovery, this vast deposit of crude oil has been an inexhaustible source of wealth and an essential pillar for the Kuwaiti economy.
The magnitude of Burgan Field is difficult to estimate. However, it is estimated that it houses initial reserves of more than 70 billion barrels of oil (of the 100,000 million that the country has), of which About 40,000 million barrels can still be recovered. During its heyday, in the 1970s, this field reached a daily production of close to 2.4 million barrels, a record that made it the main engine of the Kuwaiti economy. Currently, the Burgan Field produces around 1.7 million barrels per day, a figure that continues to represent a significant fraction of the country’s total production, which is around 3 million barrels per day.
Geologically, the Burgan Field is a wonder of nature. Its structure is an anticline formation (geological structures that act as traps where oil and gas are trapped), allowing their accumulation in exploitable quantities that extends for about 1,000 square kilometers, located about 1,500 meters below the surface. Burgan’s oil comes from Cretaceous sandstone layers, a period when vast areas of the region were submerged under shallow seas, creating perfect conditions for the accumulation of organic matter. This oil is not only abundant, but it is also of high qualitywith a low sulfur content, making it easier and cheaper to refine.
The history of Burgan Field is marked by moments of tragedy and rebirth. During the Iraqi invasion of Kuwait in 1990, the field was subject to sabotage, with hundreds of wells set on fire, creating an environmental disaster and a drastic drop in production. However, Kuwait’s resilience was remarkable. With the help of international experts, the country managed to extinguish the fires and restore the Burgan Field to production levels close to previous levels in just a few years.
The dependence on oil
Given all of the above, it is not surprising that Kuwait’s economy is highly dependent on oil, which constitutes more than 90% of its export earnings and approximately 60% of its GDP. Within this panorama, Burgan Field is the nerve center that has sustained Kuwait through decades of prosperity and challenges. In terms of per capita income, Kuwait is among the ‘richest’ countries in the world, standing at around $50,000 (according to data from the International Monetary Fund), reflecting the high standard of living enjoyed by its citizens, mainly thanks to oil revenues. Without this site, the economic and political history of the country would be radically different.
However, the fall in the price of crude oil and the OPEC cuts (Kuwait is a member of the cartel) are causing a major crisis in this small nation that, for now, has not managed to diversify its economy. Real GDP contracted 3.6% in 2023, led by a 4.3% contraction in the oil sector due to the aforementioned OPEC+ production cuts. It is expected that the economy will also have contracted in 2024, given the fall in the price of crude oil: “Lower prices and lower oil production have weakened external and fiscal balances, while financial stability has been maintained,” IMF experts highlight in their latest report.
The recession is long
“The economy is expected to remain in recession in the base scenario in 2024, to recover in the medium term. Real GDP will contract by a further 2.8% in 2024 and is expected to expand by 2.6% in 2025 as OPEC cuts are unwound,” the IMF says. However, everything depends on whether Kuwait can once again produce more oil. The timid efforts to diversify the economy have not yet borne fruit. The leaders of the country should invest in greater diversification in the same way that they have invested intensively in the field of oil innovation, something that has produced great results to date.
Interestingly, the Burgan Field has been a laboratory for technological innovations in the oil industry. Kuwait has implemented advanced enhanced oil recovery methods, such as waterflooding, to maintain pressure in the reservoir and maximize extraction. Additionally, Kuwait Oil Company’s policies have evolved to balance exploitation with sustainability, with a focus on extending the useful life of the Burgan Field as much as possible.
This site, with its history and wealth, is a clear example of How natural resources can shape a nation’s fortunes (as long as they know how to use it well). From the vast sands of the desert to global markets, Burgan Field remains an essential player on the global energy stage, bringing Kuwait’s name to every corner of the planet. Now that oil is beginning to lose relevance on a global level, the Burgan field becomes a kind of warning for Kuwait: transform or drown in your own crude oil.
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