KUWAIT, (Reuters) - Kuwait's state oil firm is projecting a 20 percent rise in net profits to $2.004 billion for the fiscal year which started on April 1.
But experts say actual income for Kuwait Petroleum Corp (KPC), one of the world's largest oil firms, is expected to exceed projections built on conservative estimates as OPEC appears to be sticking to a policy to keep world oil prices above $20 a barrel.
A panel of Kuwait's elected parliament on Sunday reviewed the financial statement for KPC for the fiscal year 2001/02 and decided to hold several more sessions "considering the size of this budget" before sending it to the full parliament for approval.
Kuwait's state budget depends almost solely on oil revenue.
KPC and its subsidiaries run various aspects of the small country's domestic oil operations in addition to other interests abroad including a large downstream network mainly in Europe, an overseas exploration arm and an oil tanker firm.
KPC's financial statement for the fiscal year, according to parliament's figures, forecasts an income of 4.7 billion dinars ($15.309 billion), expenditure of 4.08 billion dinars and a projected net profit of 616.6 million dinars. The figures compare with a projected net of 389.668 million dinars in last fiscal period to end-March 2001 which covered only nine months. But a conservative estimate of $13 a barrel was used to calculate that net while Kuwait crudes averaged almost double that during the period.
For the fiscal year 1999/2000, KPC made a net profit of 784.131 million dinars, compared with a projected 560.505 million dinars and an actual net of 575.215 million in 1998/99.
In its statement to parliament, KPC said it expected "strong" global economic growth of 3.5 percent during the period with world demand for oil rising to 76.2 million barrels per day (bpd) in the last fiscal period from 74.5 million bpd in 1999/2000.
It expects rising supplies by oil exporting states to have a "negative" impact on world prices, slipping to $22-$24 a barrel. Kuwait crudes have been trading at between $20.80-$24.71 a barrel while London IPE Brent futures closed on Friday around $28.30 a barrel.
Parliament's budget panel did not say at what price and production level the financial statement was calculated but the state budget for 2001/02 was drafted at an average $15 a barrel for Kuwaiti crudes and an OPEC quota of 2.141 million bpd.
But OPEC has cut overall output to shore up prices since the drafting. Kuwait's quota is now 1.941 million bpd. To balance the state's budget, which requires parliamentary approval, Kuwaiti crudes have to average around $22 a barrel.
With a projected oil income of 3.263 billion dinars and non- oil revenue of 568.5 million dinars, the draft forecasts a gross state deficit of 1.8257 billion dinars in 2001/02.
Kuwait's actual net budget surplus in the nine months to end-March is expected to come in at around 1.2 billion dinars, compared with a projected deficit of 1.5 billion dinars. ($1 = 0.3077 dinars)
By Ashraf Fouad
© 2001 Mena Report (www.menareport.com)