Middle East: Kuwait

MIDDLE EAST

Dr. A. F. Alhajji, Contributing Editor, Boulder, Colorado

Kuwait

A power struggle between the National Assembly (the parliament) and the central government over who controls the oil wealth has delayed the investment of international oil companies (IOCs) in the northern fields for the last two years. One foreign investment opponent summed up the opposition view by saying, "It is a deal to sell Kuwait." The dispute prompted the appointment of a non-royal family member, Adel Al-Subaih, as oil minister in February.

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The $7-billion "Project Kuwait" in the northern sector will expand output from seven oil fields to 1.41 MMbpd from 621,000 bpd, while boosting reserves to 17 billion bbl from 11 billion bbl. Officials kick-started the project by short-listing eight companies, offering access to classified information by opening "data rooms" and battling the issue in the National Assembly. Kuwait Petroleum Council, reconstituted in August 1999, short-listed eight IOCs as potential operators for a northern fields consortium: Chevron, Conoco, ExxonMobil, Texaco, TotalFinaElf, Shell, BP and Eni.

For the second year in a row, well blowouts, refinery explosions and fires marred Kuwait’s higher oil revenues. A well blew out last April in the northern field of Mutriba, and well control specialists Boots and Coots were called for assistance. Press reports indicate that Kuwait paid over $8 million to control the blowout.

Exploration. Kuwait Oil Co. (KOC) discovered a 200-million-bbl, light crude oil reserve (44°API) in the northern territory last November. It is in Sabriyah field, in northeastern Kuwait. This new discovery has the potential to produce 15,000 bopd and 45 MMcfgd.

Drilling / development. The number of wells drilled increased 39% last year. The total includes 128 oil producers and 10 service wells. The outlook for 2001 calls for a level similar to 2000.

After years of delays, Kuwait commissioned Gathering Centers 27 (190,000 bopd, 26,000 bcpd and 98 MMcfgd) and 28 (210,000 bopd), the largest of their kind. These centers were built as part of a plan to boost production capacity to 3 million bopd by 2005.

In February, Kuwait short-listed five U.S. firms to compete for an engineering / procurement / construction contract for new storage facilities at Ahmadi. The $900-million project should go for bid by September and take about three years to complete.

Production. Kuwait’s oil output, exclusive of its 50% share (315,000 bpd) of the Neutral Zone, averaged 1.67 MMbpd, up 4% from 1999’s figure. Although Kuwait’s production varied according to changes in its OPEC quota, the country said last September that it could not meet its quota, when OPEC raised the figure by 64,000 bopd. However, recent reports indicate that Kuwait is now producing above its quota.

In May, Italy’s Snamprogetti, a unit of Eni, was awarded a $55.21-million gas lift tender to enhance oil production in northern Kuwait. The project involves a new high-pressure gas distribution network to 72 wells designated for gas lift operation.

At the end of 2000, Kuwaiti oil reserves stood at 96.5 billion bbl, of which 55 billion bbl were in Burgan field, the world’s second-largest oil field. Kuwait has 11 onshore and three offshore fields. Gas reserves stood at 52.6 Tcf.