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Kuwaiti GDP rose by an estimated 1.9% in 2010, with an average growth rate of 4.4% in 2010-15. We

expect oil demand to rise from an estimated 354,000b/d in 2010 to 395,000b/d in 2015, somewhat falling

behind the pace of economic growth. Despite the absence of near-term international oil company (IOC)

investment, crude production is forecast to increase from an estimated 2.45mn b/d in 2010 to 2.79mn b/d

in 2015, subject to OPEC quota compliance.

Gas production should reach 15.2bcm by 2015, up from an estimated 13.1bcm in 2010, through both

associated and non-associated gas development. Due to rising power demand, consumption is expected to

rise from an estimated 15.9bcm in 2010 to 22.1bcm by the end of the forecast period, requiring significant

net imports.

We forecast that Kuwait will account for 4.52% of Middle East regional oil demand by 2015, while

providing 9.32% of supply. Kuwait’s estimated share of gas consumption in 2010 will have been 4.5%,

while its share of production is put at 2.94%. By 2015, its share of gas consumption is forecast to be

4.79%, with the country accounting for 2.46% of supply.

The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea

Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of

US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and

the price of heating oil during the closing weeks of the year.

In light of the unrest in the Middle East and North Africa (MENA) region in H111, as well as the oil

supply effects of the Libyan civil war, we have raised our benchmark OPEC Basket price forecast from

US$80 to US$101.90/bbl for 2011 and from US$85 to US$97.50/bbl for 2012. We expect Brent to

average US$106.00/bbl in 2011 and US$101.50/bbl in 2012. We have kept our long-term (2014-20) price

assumption of US$90/bbl (OPEC Basket) in place.

Kuwait takes last place in BMI’s composite Business Environment Ratings (BERs) table, which

combines upstream and downstream scores. The Gulf state holds eighth place, above only Saudi Arabia,

in BMI’s updated upstream ratings, given that foreign investment access is low. Kuwait’s score suffers

from strict government control of the upstream industry, undermining the healthy resource position.

Kuwait ranks sixth in BMI’s downstream ratings, but may move higher given recent government refinery

projects’ approval.