Is Kuwait About To Open For Investment? by Dave Forest, Pierce Points
There’s been a global trend toward privatization of natural resources the last several months. With lower commodities prices prompting governments like Saudi Arabia to raise cash through the sale of part of state oil firm Aramco — and the Russian government this week announcing it has sold a 10.9% stake in diamond miner Alrosa for $816 million.
But the biggest development in privatization may be about to drop, in one of the world’s richest oil nations.
Kuwait.
That revelation came in the form of an offhand comment from Kuwait’s finance undersecretary Khalifa Hamada. Who mentioned during a press gathering Tuesday that the government is considering privatizing the oil field services sector.
Hamada gave scant details on the privatization plan, only referring to it in passing during answers to other questions. But the suggestion was clear — Kuwait’s government is seriously considering allowing outside investment in its long-closed oil and gas sector.
To be clear, Hamada mentioned only oil field services — stopping short of saying the government would consider foreign investment in oil and gas exploration and production. But even an opening of the services sector would represent a major opportunity for global investors — given the scale of petroleum activity across Kuwait.
That business opportunity alone makes this a development worth watching. But a potential privatization could also have big ramifications for global oil supply.
That’s because privatization of services is a contentious matter in Kuwait. With fears over privatization from local unions having been one of the drivers for an oil workers strike that crippled the country’s production during April.
Any formal move toward privatization could further inflame union sentiment here. Potentially setting the stage for more labor disputes — and possibly further disruptions to national oil production.
That would be a critical development for worldwide oil prices. Watch for more announcements from Kuwait’s government as plans unfold.
Here’s to staying open,
Dave Forest
