Kuwait has abundant proven reserves of oil and recent discoveries suggest that Kuwait has significant heavy oil reserves as well. Heavy Oil in Kuwait ranges from conventional (easy to produce) 16 °API in lower Fars and unconventional (difficult to produce) tight oil and Tar-Mats. Developing these reserves in an environmentally compliant and sustainable manner is a national priority. The challenge of increasing national production to 4 million barrels per day will depend in large part on our ability to develop and adapt the technologies necessary to be able to exploit these heavy oil reserves.

There are around 160 types of crude oils being produced worldwide and the price differentials between crude oils can be $15 /barrel or higher. Refiners find themselves faced with the difficult question of searching for crude blends to maximize the use of their existing assets or to choose crude blends, which will require additional capital investment but will offer opportunity to increase return on investment. As per World Oil Outlook by OPEC, a continuation of moderate light-heavy crude differentials in the medium-term is indicated, followed by a progressive widening in the long-term. The moderate differentials in the short-term stem from the existence of excess refining capacity and the lightening of the global crude slate. The long-term trend toward a widening of the differentials, with heavy sour grades especially affected, is mainly due to a return over time toward a more balanced downstream as well as a gradual shift toward a more heavy crude slate. This will be alongside continued declines in inland and especially marine residual fuels demand. In addition, the on-going trend toward sulfur reduction in transport fuels will further differentiate crude oils depending on their sulfur content. In General, an Increase in Light-Heavy differential on both crude side and product side indicates better Refining Margins leading to improved profitability.

Historically, the petroleum industry supply chain has been divided into three discrete sectors: production, transportation and refining. Typically, crude is produced and made ready for transportation by production operations, and it is transported via pipeline or ship, train or truck to more sophisticated and complex refineries. Once at the refiner, the crude oil is refined into transportation fuels and other high-value finished products. The downstream sector of the hydrocarbon industry continues to optimize processing schemes to take advantage of the lowest-cost crude oil, of which a significant portion of the "opportunity crudes" are heavy oils.

Maximizing domestic processing of Heavy/Sour crudes is a KPC 2030 Strategic Direction for KNPC. Accordingly, Al-Zour Refinery (ZOR) is planned to handle heavy crudes. However, Processing of Heavy Crude in an Oil Refinery is an opportunity as well as Challenge. In my presentation, I will highlight the same from a refining business prospective.

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