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Kuwait is a major oil producer and the economy is dominated by this industry, provides more than 90% of the income of the country. Oil was first discovered in 1938, in the Burgan Oilfield in the southern part of the country. This oilfield which now has over 300 wells, has proved to be one of the world's richest, contains about half of Kuwait's proven recoverable reserves. Commercial production of crude oil began in 1946 and peaked at 3.3 million barrels a day in 1972. The oilfields are concentrated in a small area and production costs are extremely low. The level of production at the time of Iraqi Invasion in August 1990 was about 2 million barrels a day (excluding divided zone output) against an installed capacity of 2.5 million barrels a day. Local refining capacity was about 760,000 barrels a day at that time. The last of the oil fires, set alight by the retreating Iraqi army in February 1991, was extinguished in November of the same year. Since then substantial efforts have gone into reconstruction. In 1994, the Oil Minister announced that Kuwait has the capacity to pump 2 million barrels per day and is targeting a capacity of 2.5 million barrels a day. At these production rates, the proven oil reserves are estimated to be able to last for another two hundred years. The oil fires were widely reported in the world's media as one of the worst ever environmental disasters. Despite the huge damage caused by the smoke and the unburned oil it is estimated that only between 1% and 2% of the oil reserves were lost during this time. The Kuwait Petroleum Corporation (KPC) was setup in 1975 and is wholly owned by the Government. The main components of this company are an upstream operation called the Kuwait Oil Company (KOC), a downstream operation called the Kuwait National Petroleum Company (KNPC), the Kuwait Oil Tanker Company (KOTC) and the Petrochemical Industries Corporation (PIC). There is also a division which manages Kuwait's Offshore Exploration Interests (KUFPEC). KPC is also, through another subsidiary company called Kuwait Petrochemical Industries (KPI), the owner of several thousand petrol stations throughout the world selling Kuwaiti petroleum products under the `Q8' logo. The Iraqi invasion and occupation interrupted ambitious plans to build a petrochemical complex to make use of Kuwait's cheap supplies of gas; this would represent Kuwait's largest industrial enterprise outside the oil industry. The budget year in the Public sector runs from July 1 to June 30 in the following year. All proposals for expenditure receive scrutiny from the Minister's staff, by the National Assembly and by the Council of Ministers. |