Kuwait gas powers ahead

Tamsin Carlisle

• Last Updated: February 21. 2009 6:50PM UAE / February 21. 2009 2:50PM GMT

Kuwait will forge ahead with developing its gas resources, despite the political deadlock that has stalled most of the country’s oil projects, according to a senior official of its state oil company, and it will do it with the help of international energy companies.

“Kuwait is now open for gas. All our fields are open,” said Mohammed Hussein, the deputy managing director for planning and gas of Kuwait Oil Company, at a gas conference in Abu Dhabi.

“We have to maintain an aggressive gas exploration programme during the coming five to 10 years. It will be a capital intensive programme.”

Mr Hussein said the Gulf state, which is among the region’s biggest oil exporters, had no option but to spend heavily on gas development if it hoped to resolve its worsening electricity shortage in the foreseeable future. He said parliamentarians who have recently blocked foreign investment in Kuwait’s oil and petrochemicals sectors were unlikely to oppose gas development partnerships because of the country’s pressing domestic need for the fuel.

Most Gulf states, except for Qatar, are short of gas for power generation, but Kuwait’s electricity crisis has been one of the region’s worst, with power cuts becoming a frequent occurrence during the heat of summer.

The country’s long search for gas not associated with its oil fields, dating back to the 1970s, yielded its first commercial discovery only in 2003. Even then, KOC delayed announcing the new field for another two years.

“We didn’t announce it because we had been so discouraged in gas exploration,” Mr Hussein said.

Since then, several more gas fields have been discovered in Kuwait’s desert, but all at depths below 4,000 metres. Gas occurring at such depths is usually “sour”, containing high concentrations of deadly hydrogen sulphide, and is trapped underground at extremely high pressures. That makes it technically challenging, and dangerous, to produce, which is why Kuwait needs help from international companies that are experts in the field.

“With our gas reserves, we are deeper than anyone else in the Gulf, which has made development elusive to us,” said Mr Hussein. “Technology will play a great role in optimising and ensuring the success of the programme.”

KOC expected to bring an additional 2 billion cubic feet per day (cfd) of gas into production over the next seven years, and would spend US$8bn (Dh29.38bn) to $9bn on drilling and infrastructure such as pipelines and processing plants, he said.

According to industry sources, KOC plans to award by April the main engineering, procurement and construction contract for the second phase of production from several of its deep gas fields. The project, which will tap an estimated 32 trillion cubic feet of reserves, aims to raise Kuwait’s gas production to 600 million cfd from the current 145 million cfd by 2012.

But many other energy-related projects face serious delays in Kuwait, including some that would help the country alleviate its power problems.

Earlier this month, Kuwait postponed bids on a contract to build turbines for a large power project, citing financing difficulties. In late December, the country’s Supreme Petroleum Council cancelled a $17.4bn petrochemicals joint venture with the US company, Dow Chemical. A $15bn refinery project and about $51bn of planned oil developments have also been put on hold.



tcarlisle@thenational.ae