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Kuwait seeks to enhance oil and gas production

Kuwait: Sunday, May 18 - 2008 @ 15:56

The government has outlined plans to spend $51bn over the next five years developing its energy industry to raise oil production capacity even further from its current 2.7 million barrels-a-day and slow the depletion of reserves from existing fields.

According to Farouk al-Zanki, chief executive of state-owned Kuwait Oil Company, the national plan is to raise oil production capacity in stages to three million barrels a day by 2010, 3.5 million bpd by 2015 and then to four million bpd by 2020.

At least half the investment will be needed for new drilling and enhanced recovery technologies, he says.

However, arguments over the exact level of Kuwait’s proven oil reserves with former Oil Minister Sheikh Ali Jarrah al-Sabah last year seem to confirm press reports that reserves have fallen to 48 billion barrels from a previously stated 100 billion barrels.

The latter figure has subsequently been officially reinstated, thereby also confirming the country’s OPEC quota that is based on proven reserve data.

Probable reserves

In any event Kuwait does, in addition to proven reserves, possess probable reserves of 150 billion barrels according to official figures. When the term proven is applied this generally means that oil has a 90% chance of being extracted while the description probably indicates a 50% chance.

Meanwhile, a very aggressive programme to enhance production capacity is under way to allow for the four million bpd target to be achieved by 2020. In the next three years Kuwait is also due to exploit heavy oil reserves in the emirate’s Lower Fars reservoir. This follows a technical assistance memorandum of understanding signed with US company ExxonMobil.

However, the so-called Project Kuwait appears to have been shelved after domestic opposition to direct foreign involvement and foreign majors having a stake in oil reserves.

First proposed several years ago, the plan originally envisaged bringing in international oil companies such as Royal Dutch Shell and others to develop four northern oilfields near the border with Iraq. If the plan had gone ahead Kuwait would be producing at least three million bpd by now.

Kuwait Petroleum Company’s CEO Saad al-Shuwaib says that the Supreme Petroleum Council still believes in Project Kuwait and believes it stands a chance of eventually going ahead. For the present though the involvement of foreign majors is being negotiated on the basis of enhanced technical service agreements.

Following ExxonMobil’s heavy oil agreement, BP may also sign a technical service agreement for oil fields in the west of the country, while Chevron is thought to be considering a similar agreement for the main Burgan Field and adjacent areas in the southeast. Royal Dutch Shell is also reported to be discussing a technical service agreement to treat and process non-associated gas reserves.

A further addition to crude output is expected in the neutral zone shared with Saudi Arabia, where production capacity is due to be raised by 50,000 to 350,000 bpd.

Natural gas

Al Shuwaib says that Kuwait is also striving to increase production of natural gas, which is urgently needed for power generation, desalination and industrial users. Since Kuwait is unable at present to meet its own gas needs, it is negotiating over gas imports with both Iran and Iraq as well as with other GCC states.

At the same time Kuwait is seeking to increase domestic production of natural gas and condensates on a phased basis. The aim is to raise gas output to 600 million cubic feet-a-day by 2010 from 180 million cf/d at present, with expectations that this could rise to one billion cf/d and more.

Kuwait has identified some 35 trillion cubic feet of gas not associated with oil deposits in the north of the country. One of the promising new discoveries is in the Al-Dhabi of northern Kuwait that lies adjacent to the emirate’s important Raudhatain oilfield.

As much as 70% of the non-associated gas discovered in the north is said to be recoverable. The offshore Dourra field, shared with Iran, is also considered another promising potential source with an estimated seven trillion cubic feet of recoverable gas.

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Sunday, May 18- 2008 @ 15:56 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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