UPDATE 2-Kuwait names formin oil minister in new cabinet

(Adds details, more MP reactions, analyst)

By Ulf Laessing and Eman Goma

KUWAIT Jan 12 (Reuters) - Kuwait's foreign minister was appointed acting oil minister in a minor cabinet reshuffle intended to end a political standoff which has delayed reforms in the OPEC producer, state media reported on Monday.

Only the oil, water and electricity, health and transport portfolios were changed in the Arab state's fourth new cabinet since March 2007.

Mustapha al-Shamali remained finance minister, while Sheikh Mohammad al-Salem al-Sabah, a key member of the ruling family, will stay foreign minister and also take over from outgoing oil minister, Mohammad al-Olaim, the news agency KUNA said.

Changes in the oil ministry usually have little impact on Kuwait's energy policy which is decided by a council including industry experts.

Several deputies, with a history of challenging the cabinet, immediately criticised the new lineup, raising worries a pattern of political crises will continue, threatening much-needed reforms to diversify the oil-driven economy.

"We were expecting a better formation of the government ... the return of some ministers will lead to conflicts. We hope the performance of ministers will be different," Islamist deputy Saleh Ashour told reporters in parliament.

URGENT ISSUES

Prime Minister Sheikh Nasser al-Mohammad al-Sabah had resigned along with his cabinet in November after three parliamentarians moved to question him. But Kuwait's ruler, who has the last say in politics, reappointed his nephew.

With a new government in place, deputies cannot question Sheikh Nasser on the same grounds but could on different issues.

The world's seventh-largest oil exporter wants to diversify its economy like neighbours Dubai or Qatar which have become trading hubs but key reforms such as the launch of a financial regulator have been delayed due to the standoff.

The acting oil minister's main task will be to restore confidence among investors after Kuwait cancelled a $17 billion project with Dow Chemical (DOW.N) after opposition from MPs, just weeks after signing the deal.

He will also have to decide on the fate of a $15 billion refinery which has been put on hold after parliament launched an investigation, and a multi-billion tender to upgrade two refineries which has also been delayed.

"As acting minister he will do only the urgent issues but probably not plan any long-term strategy. We really need a full-time minister," said independent Kuwaiti oil analyst Kamel al-Harami.

To read a FACTBOX about Kuwait's planned economic reforms please double click on [ID:nLA107026] (Editing by Katie Nguyen)