The head of Kuwait Oil Co (KOC) Abdel-Latif al-Turah told a news conference in Ahmadi, a southern town in the heart of the country's oil industry, that the Kuwait Petroleum Corp (KPC) approved the project at a board meeting on Saturday and that preparations were under way to launch the major tender.He said Kuwait, with the eventual participation of foreign oil majors, still hopes to boost its production capacity to around three million bpd by 2005.To meet the ambitious plan, which has been delayed by internal differences and a debate in the country's parliament, Kuwait now plans to add two export ship-loading single point mooring buoys (SPMs) in Ahmadi and expand the North and South tank farms.The tender will also involve major pipeline work and pumpingstations in the area to lift export capacity to three million bpd. Kuwait is currently using two of three buoys in Ahmadi.

Experts said the project could cost up to $800 million.Turah refused to disclose current production capacity in Kuwait, one of a few major oil exporters which could participate in a Saudi Arabian plan to pump an extra 500,000 bpd into world markets to take some pressure off oil prices.But experts put Kuwait's capacity at around 2.5 million bpd, adding that it is expected to rise further next year with expansion and completion of work on new gathering centres (GCs).

The excess capacity is currently the focus of world oil markets which are closely watching for additional output from major producers under the Saudi Arabian plan to raise supplies to bring prices down to around $25 a barrel.Kuwait, which sits on almost 10 per cent of the world's oil reserves, is currently producing at its new OPEC quota of 2.037 million bpd which was raised from 1.98 million bpd as of July 1 in an effort to contain prices which had little market impact.Turah reiterated that a Chinese firm, which has been running way behind schedule, was now due to hand over two gathering centres (GC 27 and GC 28), with a combined capacity of around 400,000 bpd, in December and February respectively.

He indicated that foreign oil majors were needed to meet the target of doubling output from northern oil fields to 900,000 bpd by 2005, but a law governing the controversial opening up of the industry is still making its way through the corridors of parliament.Parliament, where some influential MPs have voiced reservations against the opening up for the first time since Kuwait fully nationalised the oil sector in 1980, is due to close later this month for a long summer recess.

Foreign oil company executives, who have been eagerly waiting for several years for the major policy change, and some MPs do not expect a debate on the law to start in parliament until late this year.Kuwait has announced plans to invite world oil majors to bid for Kuwait Project to operate oil fields close to the northern border with former occupier Iraq.They are expected to invest some $7 billion under a 20-year contract which will also include building a new export terminal in the North and a new city.

So far, KOC, part of KPC which runs all aspects of the oil industry in Kuwait in addition to some foreign operations, is the only firm allowed to drill for and produce oil in Kuwait.