LEADING IN INDUSTRIAL DIVERSIFICATION
Kuwait, the prototypical oil-rich state, has more than ten percent of the world’s estimated oil reserves, and is a leading exporter of petroleum. Tourists, who look forward to a relaxed entry into the Muslim world, can enter Kuwait, and wander around souks, mosques and other sandy traces of ancient Bedouin days. But, behind the extravagant richness, lies the traditional values and warm Arabian hospitality.
Oil-rich Kuwait was a founding member (1961) of the Organization of Petroleum Exporting Countries (OPEC). The country>s oil revenues have been used to provide financial aid to other Arab countries, and the nation became a supporter of Palestinian causes. Although Kuwait has maintained strong ties with Western nations, it also established diplomatic relations with the Soviet Union in 1963, the first of the Arabian Gulf states to do so. In 1981, Kuwait became a founding member of the Gulf Cooperation Council (GCC).
ECONOMY
Kuwait economy in the 18th and 19th century was based on trade due to the natural harbour of Kuwait that first drew the Bani Utub settlers to the place. In 1938, oil was discovered in Kuwait and ever since the commencing of oil exports in the post World War II era, the Kuwait economy has only changed for the better.
The Kuwait oil reserves are estimated at 101.5 billion barrels that was supposed to be about 10% of the total reserves in the world. Oil exports count for almost 60% of the GDP, 95% of export revenues, and 80-90% of government income.
The wealth of Kuwait is based primarily on oil and capital reserves, and the Iraqi occupation severely damaged both, although both have been restored as reconstruction has proceeded and world oil prices have risen.
Kuwait’s current production capacity is estimated to be 2.5 million bpd. Kuwait plans to increase its capacity to 3.5 million bpd by 2015 and 4.0 million bpd by 2020.The Kuwait economy is still continuing to look upwards as negotiations continue for the opening of many more oil wells to the north of the country. The economy is controlled by the government who controls the oil industry.
Kuwait’s traditional exports were pearls and hides, but since 1946 it has become major petroleum producer and oil now dominate the economy.
Kuwait has the third largest oil reserves in the world after Saudi Arabia and Iraq. The main concession for oil exploitation was held by a joint British-American firm until 1974, when Kuwait took control of most of the operations; it had previously retained a large part of the oil profits. Much of the profits have been devoted to the modernization of living conditions and education in the country. The petroleum industry accounts for over 90% of Kuwait>s export revenues; however, huge amounts of natural gas complement Kuwait’s oil production.
Kuwait Petroleum Company (KPC), an integrated, state-owned oil company, is also the parent company of the government’s operating companies in the petroleum sector also participates in a number of successful joint ventures with Dow Chemical within Kuwait and abroad; and Kuwait Petroleum International manages refining and retail operations in Europe and East Asia.
According to official OPEC figures, Kuwait has about 101.5 billion barrels of proven oil reserves, including the Kuwaiti share of proven reserves in the Divided Zone.
To provide against the possible future exhaustion of the oil reserves, in the 1960s, the government launched a programme of industrial diversification and overseas investment. Present industries include food processing, desalinization, construction, and the manufacture of electronics, cement, textiles, and fertilizers. Food, construction materials, vehicles, and clothing are the principal imports. Kuwait’s major trading partners are the United States, Japan, European Union countries, and Singapore.
