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(Bloomberg) – Kuwait Petroleum Corp. plans to spend about 10 billion dinars ($33 billion) over five years to ramp up oil production capacity, betting on robust demand for decades to come.

“We’re looking to make massive investments,” CEO Sheikh Nawaf Al-Sabah said in an interview. That’s “not only to maintain our production capacity, but ultimately grow it like our strategy calls for us to do.”

Kuwait’s bullish outlook for demand chimes with a number of other producers and traders such as TotalEnergies SE and Vitol Group. Yet the International Energy Agency, an adviser to key consuming nations, has said oil use will stop growing by 2030 as the shift to electric vehicles and renewables gathers pace.

KPC’s outlay is part of a 20 billion-dinar investment program that started in April and covers everything from upstream to petrochemicals. The state-owned firm’s exploration and production division targets capacity of 3.2 million barrels a day next year, and ultimately 4 million barrels a day by 2035.

“The market in oil demand — looking to 2050 and beyond — will continue to be more or less where it is now,” Sheikh Nawaf said. “Who’s going to supply that oil? We are both lowest cost and lowest carbon intensity, and we intend to remain there.”

Kuwait is already among the world’s top 10 producers, pumping just under 2.5 million barrels a day. That puts it ahead of fellow OPEC members Nigeria and Libya. As oil fields in many countries go into decline, there’ll be increased need for those that can provide stable output, according to the CEO.

“You need to replace at least 3 million bpd of production capacity per year from existing fields worldwide,” he said. That means “bringing out a new Kuwait every year.”

Funding Plan

The investment program requires KPC to take on more debt. It uses a revolving credit facility for day-to-day operations, and is studying other funding options — including possible deals for stakes in its pipelines — for future projects.

“I’m looking at where the cheapest money is going to come from,” Sheikh Nawaf said. “If it comes from a pipeline monetization deal, which would be opened to domestic and foreign investors — like what Adnoc and Aramco did recently — I’ll pursue that.” Any such agreement would likely be done through “lease and leasebacks,” he said.

KPC has multiple sources of financing, though tapping equity markets — as Saudi Aramco has — isn’t on the table, according to the CEO. One idea it’s already pursuing is letting local, non-state companies “undertake many of the non-core activities we currently do,” such as certain chemicals production, he said.

Kuwait initially planned to pump 4 million bpd in 2020, but the target was pushed back several times. The country previously reached 3.2 million bpd capacity, later scaling it back amid a slump in oil prices and a lack of technical expertise. Now, it’s returning to those goals on a belief that the energy transition will be a very gradual process.

Ending fossil-fuel production without an abundant, reliable alternative is like “calling for humanity to jump out of a plane and then try to invent a parachute on the way down,” Sheikh Nawaf said.

OPEC+ Quota

A potential obstacle to KPC’s expansion is its OPEC+ production quota, which stands at about 2.4 million barrels a day. The group is due to begin a series of monthly increases early next year, but they’ll be modest.

“We’re firm believers that we need that production capacity,” Sheikh Nawaf said. It’s important to have a supply buffer in the event of a “hiccup” anywhere in the world, he said.

Fellow Gulf country — and OPEC member — the United Arab Emirates also has been spending billions of dollars to boost capacity, leading to occasional clashes with OPEC leader Saudi Arabia. The Saudis halted their own, far bigger expansion plan.

Testament to KPC’s optimistic demand outlook, the company opened a giant new refinery two years ago. The sprawling 615,000-barrel-a-day Al-Zour complex south of Kuwait’s capital is running at full tilt, and has so far shipped almost 26 million tons of oil products to 67 customers globally, according to Sheikh Nawaf.

Keen to tout the plant’s environmental credentials, he said “the arc is bending toward low-cost, but also low-carbon production.” On top of the 20 billion-dinar investment program, KPC plans to spend about $110 billion on its 2050 net zero strategy, part of which will go toward carbon capture and solar power.

Sheikh Nawaf also said:

• In an efficiency drive, the company will combine some units over a two-year period. Upstream divisions will be merged, as will two downstream businesses. A new fuel-trading unit based in Dubai will be up and running in the first half of 2025.
• KPC this year tested the spot sale of destination-free cargoes for super-light crude and heavy crude, with production of both not large enough to justify long-term supply contracts. It’s “still assessing the outcome.”
• Kuwait is now a major provider of jet fuel to the Europe Union, supplying more than 12% of the bloc’s 40 million-ton annual demand.