Kuwait’s chemicals and petrochemicals industries, supported heavily by its vast oil and gas reserves, were once seen as vital to the country’s future. Several projects were earmarked for growth under the Kuwait National Development Plan 2020-25 and other long-term frameworks. However, many of these initiatives, including a major chemicals project overseen by the Kuwait Integrated Petroleum Industries Company (KIPIC), have lost prominence in the updated economic blueprint.
This shift is tied to broader regional competition, evolving global energy markets, and the government’s aim to prioritize sectors with higher long-term returns. The National Industrial Strategy 2035, launched in late 2023, focuses on diversifying industrial output into sectors such as renewable energy, medical industries, and advanced manufacturing. The six sectors highlighted include building supplies and cutting-edge technology industries like artificial intelligence and nanotechnology. Chemicals, while still significant, no longer hold the same level of strategic importance as before.
The plan also underscores a pivot toward sustainability, aiming to position Kuwait as a leader in renewable energy and other environmentally friendly technologies. With petrochemicals’ significant carbon footprint, there’s growing pressure from both local stakeholders and international investors to pursue greener alternatives. The National Industrial Strategy thus repositions resources away from high-emission projects toward more sustainable industries.
This redirection was apparent when the state-backed chemicals project, initially valued in the billions of dollars, was shelved indefinitely. Market analysts suggest this was partly driven by a recognition that global demand for certain petrochemical products might not recover to pre-pandemic levels, and by the increasingly competitive landscape, especially from neighboring Gulf countries. Saudi Arabia’s petrochemical giant SABIC and Qatar’s burgeoning chemicals industry are examples of formidable competitors that have significantly ramped up production, making it difficult for Kuwait to maintain its planned growth trajectory in this sector.
While Kuwait remains a top exporter of ethylene, polyethylene, and other organic chemicals, the government appears to be steering its focus toward sectors that can yield long-term growth with less market volatility. Additionally, the country's reliance on joint ventures with international firms, such as its longstanding partnership with U.S.-based Dow Chemical, underscores a dependence that has been reevaluated in light of these strategic shifts.
The chemicals sector, however, is not being entirely abandoned. Smaller projects, particularly in specialized chemicals and products serving domestic construction needs, continue to receive support. Ahlia Chemicals Company, a local leader in construction chemical manufacturing, and the National Chemical and Petroleum Industries, which produces a range of essential chemical agents, remain integral to Kuwait’s industrial ecosystem. These companies are now being encouraged to innovate and adapt to the evolving demands of Kuwait’s new industrial strategy, with a focus on supporting the domestic economy rather than chasing large-scale international exports.
Kuwait’s refocusing also ties into the country’s ambitious Silk City mega-project and its vision to develop the Northern Economic Zone (NEZ). The $2.3 billion Sheikh Jaber Al Ahmad Al Sabah Causeway and other infrastructure developments aim to attract foreign investment in new industries, far removed from the traditional oil and chemicals sectors. The government has forecast the creation of hundreds of thousands of jobs in advanced manufacturing, agriculture, and tourism by 2040. These areas, along with the development of new industrial zones, are viewed as more sustainable and strategic in the long run.
The shelving of the chemicals project is thus a reflection of Kuwait’s evolving approach to industrialization. The government is keen to invest in sectors that promise higher returns with lower environmental costs. With the global push for decarbonization and the rapid technological advancements in areas such as renewable energy, the chemical industry may face long-term headwinds. Kuwait’s decision to reallocate resources is seen by some as a forward-looking strategy that acknowledges these trends, while still leveraging its existing strengths in oil and gas to support broader economic diversification.