Kuwait has become notorious in the international oil business, where interminable delays to its projects have earned it the nickname 'Queue and wait'.
'Queue and wait' lives up to its name as oil rivals advance
Kuwait has become notorious in the international oil business, where interminable delays to its projects have earned it the nickname "Queue and wait".
The gridlock increasingly threatens not only its role in world oil supplies, but its residents' standards of living and even financial security.
In 1997, concerned about the increasing maturity of Burgan, the world's second-largest conventional oilfield, the supreme petroleum council announced "Project Kuwait", an ambitious plan to attract US$7 billion (Dh25.71bn) from international oil companies (IOCs) to increase capacity at five northern fields within three years. Total national output was to reach 3 million barrels per day (bpd) by 2005 and 4 million bpd by 2020.
This proposal came at a time of low oil prices, when nearly all Opec countries were seriously trying to attract more foreign investment.
Yet Kuwait's motive was not only economic, but political. The consortiums invited to bid included European, US, Russian, Indian and Chinese corporations, and the northern fields lie close to the Iraqi border - two of them are extensions of Iraqi supergiant fields now being developed by IOCs.
The presence of foreign investors astride what was the 1990 Iraqi invasion route into Kuwait was regarded as a guarantee of political support for intervention in the case Iraq attempted a repeat.
The IOCs would not have owned any oil, as that would have been contrary to the Kuwaiti constitution. They would simply have been contractors, earning a fee for each barrel produced, as in today's Iraq. Yet the deal aroused intense political controversy in Kuwait's national assembly.
A draft law on Project Kuwait was proposed to the parliament in April 2000, but after a year of heated debate, it was rejected. Some MPs claimed the deal was unconstitutional and that the Kuwait Petroleum Corporation (KPC) should be able to handle the project itself; others claimed KPC's inability to do so 25 years after nationalisation of the oil industry reflected badly on the government.
The political deadlock, however, went beyond ideas about managing the sector, and reflected the continuing conflict between the two branches of the ruling Al Sabah family, and the parliament's attempts to assert its prerogatives, sometimes independently, sometimes as a tool of an Al Sabah faction.
In January 2002, a huge explosion at Raudhatain, one of the northern fields, killed four people and disrupted 600,000 bpd of production.
Khalid Al Subaih, then the oil minister, blamed the accident on "prominent figures" who appointed unqualified friends and relatives to senior positions.
In June 2005, Farouk Zanki then the chairman and managing director of Kuwait Oil Company, a subsidiary of KPC, said: "By the start of 2006, we will have the IOCs operating in here". Yet he was to be disappointed. The 2006 crisis over the accession of Sheikh Saad Al Abdullah Al Sabah and his swift deposition on the grounds of ill health interrupted progress. The release of a report claiming Kuwait's oil reserves were much lower than the official 101.5 billion barrels was further ammunition for critics of the deal.
In 2009, Chevron and BP, who had been assisting Kuwait since post-Gulf War reconstruction, finally withdrew their senior executives after giving up on finalising an agreement.
Project Kuwait was not the only scheme to suffer repeated delays. Kuwait is short of gas for power generation and suffers persistent summer power cuts despite importing expensive liquefied natural gas. However, an agreement with Shell to develop technically difficult deep gas reservoirs in the north was halted last month by a parliamentary investigation.
Lacking gas, the country needs clean, low-sulphur fuel oil. A 2005 plan to build the Middle East's largest refinery at Al Zour was scrapped in March 2009, resuscitated the following May by a new parliament, aimed for relaunch in February last year, and announced to be back on track this month. Meanwhile, the cost has risen from 6.3bn to $15bn.
If Kuwait is to continue to support Saudi Arabia in Opec, as it did last month, it needs to expand production capacity above the current 2.7 million bpd. It needs gas and its ageing refineries modernised.
And after last week's expansionary budget, which even the head of the budgets committee described as "crazy", the Kuwaiti economist Jassem Al Saadoun told the Kuwait Times: "A budget that high … leads to creating a time bomb in … the economy. All what we do is sell oil, then reap and distribute the harvest." Kuwait now needs an oil price of $85 to $90 a barrel to balance its budget.
Since 1997, Saudi Arabia has consolidated its position as the world's leading oil exporter; Qatar has become the world's largest liquefied natural gas exporter; and even Iraq has begun ambitious oil expansion projects.
Yet Kuwait remains the most closed country in the world to foreign petroleum investment.
An industry with a time horizon of decades, the lifeblood of the economy, is held hostage by political squabbling and indecision, with no resolution in sight.
ARobin Mills is an energy economist based in Dubai, and the author of The Myth of the Oil Crisis and Capturing Carbon