Kuwait seeks to import Iraqi gas in Shell deal

Kuwait seeks to import Iraqi gas in Shell deal

Apr 11, 2011
Tamsin Carlisle

Kuwait is seeking to import gas from Iraq through a deal with Royal Dutch Shell.
The emirate burns large volumes of oil in its power plants as it has insufficient supplies of cleaner-burning gas.

It has contracts with Shell for summer imports of liquefied natural gas (LNG) and for a complex project to exploit deep gasfields near its border with Iraq, but that project will take years to develop.

In the meantime, Kuwait is seeking to boost imports, some of which may come from the vast gas resources of its neighbour.

"Kuwait is not negotiating with the Iraqi government in this regard, but with international oil companies in Iraq that are developing oil and gas fields there," the Kuwaiti newspaper Al Jarida has reported, citing a source in the state gas industry.

The emirate was hoping to secure a deal for Iraqi gas to start being delivered within the next 12 to 18 months, the official said.

"It is likely that the Kuwaitis have approached Shell, which is in the final stages of negotiating an associated gas-gathering and monetisation joint venture with state-owned South Gas Company in Iraq and Japan's Mitsubishi," said Samuel Ciszuk, the senior Middle East energy analyst at IHS Global Insight.

The much delayed Shell-led venture would gather large gas volumes produced from southern Iraq's big oilfields. The gas there is now being flared, or burnt off.

The priority use for the gas is to fuel Iraq's electricity sector but surplus may be available for export in the first few years of the project while power plants are built.

Shell has suggested temporary exports through a proposed floating LNG terminal it could build within 18 months of signing a contract.

"The Iraqis and Shell might in the end prefer the flexibility of LNG over piping gas to Kuwait," Mr Ciszuk suggested.

At an oil and gas summit in Kuwait last week, Mohammed Hussain, the deputy chairman of Kuwait Oil Company (KOC), said gas supply had become a critical issue for Kuwait and KOC had a long-term plan to nearly quadruple gas output to 4 billion cubic feet a day by 2030.

But LNG imports to Kuwait, which began in 2009, would continue to be needed for some time before the emirate could sufficiently boost its domestic gas output, said Hashim al Rifai, the managing director of planning at Kuwait Petroleum Corporation, the parent of KOC.
The imports have come from as far away as Sakhalin Island in Russia.

Some of the additions to Kuwait's domestic gas output are expected to be associated with increased oil production.


But the emirate faces an uphill battle to develop its marginal oil resources and refurbish large oilfields that were badly damaged in the First Gulf War.

Kuwait eyes LNG project Down Under

Kuwait eyes LNG project Down Under

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.

Kuwait, which started importing LNG in 2009, is expected to do so until it boosts production from its own gasfields.
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.

Kuwait Oil Spends $5.41B A Year on Capex

Kuwait Oil Spends $5.41B A Year on Capex

Monday, April 04, 2011
Dow Jones Newswires

by  Alex Delmar-Morgan & Wayne Ma

Kuwait Oil Company, responsible for the Gulf state's oil and gas exploration and production, is spending around 1.5 billion Kuwaiti dinars ($5.41 billion) on new capital expenditure every year, the group's chairman and managing director said Monday.

"On average we are spending about 1.5 billion Kuwaiti dinars a year on capital," Sami Al-Rushaid told reporters at an energy event in Kuwait.

He didn't elaborate on what the money was invested in.

Organization of Petroleum Exporting Countries member Kuwait is the world's fourth largest oil producer currently pumping around 2.2 million barrels a days and sits on about 10% of the world's crude reserves.

Kuwait to overhaul oil industry

Kuwait to overhaul oil industry

Tamsin Carlisle

Last Updated: Apr 4, 2011

Sheikh Ahmad al Abdullah Al Sabah, Kuwait's oil and information minister, is expected to unveil a plan for restructuring the country's oil industry.

AFP

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Ministers in Kuwait are today expected to unveil a plan to overhaul the nation's oil industry in a bid to bring its economic fortunes more into line with those of its neighbours.

Other Gulf oil exporters such as the UAE, Saudi Arabia and Qatar, are streaking ahead of Kuwait in terms of economic development. That is despite the nation's vast oil endowment, which has already transformed its living standards for its citizens who now enjoy an annual income averaging more than US$43,000 (Dh157,928) per head.

But Kuwait is the least popular destination in the GCC for foreign investment, and it ranked lowest in the World Bank's ease of doing business index for this year. Many development projects are on hold, leaving Kuwaitis short of vital infrastructure such as power plants and hospitals.

"We did not have a new hospital built over the last 30 years, we are still teaching in schools that were built 40 years ago," said Dr Abbas al Mejren, an associate professor and the director of the energy and environment unit at Kuwait University.

The government's long-term plans to boost oil production capacity are in disarray at a time when the Opec exporter should be reaping huge financial benefits from buoyant oil prices and increasing demand for Gulf crude to replace curtailed Libyan exports.

Oil output from Libya, the biggest holder of African crude reserves, has fallen by more than three quarters because of the armed conflict there.

Today, at the start of a two-day oil and gas summit in Kuwait City, Sheikh Ahmad al Abdullah Al Sabah, Kuwait's oil and information minister, will unveil a plan for restructuring the state's oil industry, with the aim of enhancing global business opportunities.

A major element of the programme is expected to be a government investment initiative aimed at promoting Kuwait's involvement in foreign oil and gas development.

Farouk al Zanki, whose appointment last autumn as the chief executive of Kuwait Petroleum Company heralded a strategy overhaul at the national oil company, is to lay out his 20-year vision tomorrow for the company's future.

The conference is being held against a backdrop of renewed political crisis in Kuwait, which is the only GCC country with an elected parliament. On Thursday, the 16-member cabinet resigned after politicians sought to question three ministers.

That followed demonstrations organised by youth groups and others opposed to the government and to Kuwait's participation in the recent GCC intervention in Bahrain.

Parliament has been dissolved three times since 2006.