Apr 7, 2011
Tamsin Carlisl
KUWAIT CITY // The Kuwait Foreign Petroleum Exploration Company (Kufpec) expects D-Day in August for a final investment decision on its participation in a A$20 billion (Dh75.83bn) Australian liquefied natural gas (LNG) project.
Development of the Wheatstone LNG project off the coast of north-west Australia is slated to start next year, Ali al Shammari, the deputy managing director of Kufpec, told a conference in the Kuwaiti capital.
Kufpec, which is the Kuwaiti government's overseas oil and gas investment arm, has joined forces with the US oil and gas producer Apache to explore and develop gas prospects including the Julimar and Brunello fields off the north-west coast of Australia. The Kufpec-Apache partnership's licences are for areas close to the Wheatstone gasfield, operated by the US oil major Chevron, and the Gorgon and Pluto fields, where two other large LNG projects are under development.
Kimimasa Mayama / Bloomberg News
"We selected Australia as an exploration focus due to stable fiscal terms and high geological potential," Mr al Shammari said.
In October 2009, Kufpec and Apache signed an agreement with Chevron to supply gas to Wheatstone LNG in return for equity stakes in the project. Kufpec now holds a 7 per cent interest in the project, after the South Korean utility Kogas also signed up as an equity partner.
"Wheatstone is a potential game-changer for Apache, unlocking 2.1 trillion cubic feet of gas reserves at two of Apache's largest discoveries and generating steady production for 15 years at prices pegged to world oil markets," G Steven Farris, the chairman and chief executive of Apache, said at the 2009 signing ceremony.
On completion, the planned LNG plant at Ashburton North, in the state of Western Australia, will have an annual production capacity of 15 million tonnes of the super-chilled fuel. The first phase of the project, already under development, will export up to 8.9 million tonnes per year of LNG to Asian customers including Kogas, and the Japanese utilities Tokyo Electric Power and Kyushu Electric Power.
The power companies have already signed long-term gas purchase contracts with the Wheatstone partners. Exports are expected to commence in 2014.
Japanese plans to import gas from Wheatstone are unlikely to be affected by the recent earthquake disaster and nuclear crisis in the country. Analysts expect Japan to require substantial additional LNG imports to compensate for potential nuclear plant closures and slower nuclear development.
Natural gas is an important part of Kufpec's development portfolio.
The company is also involved in a Singapore project that exports gas to industrial users in South East Asia and a Chinese project supplying gas for domestic power generation. It has interests in producing gasfields in Pakistan and expects soon to bring a new Indonesian field into production and to sanction the development of a Malaysian field with 1 trillion cubic feet of reserves, a company official said yesterday.
The overseas gas projects are part of a Kuwaiti government plan to increase the emirate's access to global gas supplies and to broaden its oil and gas industry technical expertise.
"We are looking at an area in which we can transfer technology. LNG is an area where we were lacking," Mr al Shammari said.
Kuwait started importing gas in 2009. The LNG imports are expected to continue until the emirate completes complex projects to boost production from deep gasfields in the north of the country.
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