The Origins of Kuwait’s Oil Industry

The Origins of Kuwait’s Oil Industry

Following on from last week’s post, we look at beginnings of the oil industry of Kuwait, a country which is believed to have the fourth largest oil reserve in the world today. Kuwait’s oil industry began in 1921, when Sheikh Ahmad Al Jaber Al Sabah became Kuwait’s ruler. The Sheikh was aware of prospectors’ activities in neighbouring countries, Bahrain, Iraq and Saudi Arabia, not to mention the Anglo-Persian Oil Company’s widely publicised success in Iran. Sheikh Ahmad Al-Jaber Al-Sabah wanted to ensure that Kuwait got its cut of the action. The country’s main industry, the age old art of diving for pearls, was coming under threat due to the jewellery industry’s move to cultured pearls. When ominous black pools of a bituminous substance were located in the desert, Sheikh Ahmad Al-Jaber Al-Sabah grew hopeful that this indicated underground oil reserves which might rejuvenate the Kuwaiti economy. Expectations were greatly elevated by the finding of oil reserves in Bahrain during 1932.

The Sheikh officially granted the first oil concession in December 1934 to Kuwait Oil Company Limited. The company was formed by the Anglo-Persian Oil Company (today known as BP) and the Gulf Oil Corporation (today the company we know as Chevron).

Burgan, a desert area in south eastern Kuwait, was highlighted as an area of interest in speculative reports. The first discovery of oil in Kuwait was made in 1938. By 1946, the State of Kuwait had begun exporting oil all over the world.

During the 1970s, as was the policy of other oil producers in the Middle East, began to nationalise its natural resources. The state’s interest in Kuwait Oil Co was gradually increased until the government gained complete control in December 1975. The KPC, or Kuwait Petroleum Corporation, was founded in 1980, uniting four state-owned Kuwaiti companies which were responsible for oil production in the country, as well as its processing and transportation. Today, the Kuwait Petroleum Corporation has interests in six continents, overseeing a fully integrated industry. The Burgan remains in production. It is one of the world’s richest and largest oil fields.