Kuwait opens first LNG import facility in push for greener electricity

Verity Ratcliffe July 13, 2021

(Bloomberg) - Kuwait has opened its first permanent facility to import liquefied natural gas, as oil-rich Persian Gulf states accelerate efforts to wean their power plants off crude and use cleaner forms of energy.

The Al Zour LNG terminal received its first cargo of gas, from Qatar, on Monday, according to state news agency Kuna.

The plant, roughly 10 miles from Kuwait’s border with Saudi Arabia, is designed to import as much as 22 million tons of the super-chilled gas each year, making it easily the largest of its kind in the Middle East.

“Gas demand in Kuwait is set to rise in the power sector due to the planned phase-out of oil plants worth 10 gigawatts,” Abhishek Rohatgi, an LNG analyst at BloombergNEF, said in a note. “Gas-demand growth is likely to outpace domestic production growth from the Jurassic fields, raising LNG imports.”

BloombergNEF expects LNG use in the Middle East to increase almost 50% by 2025, with most of the increase coming from Kuwait.

Several of its neighbors are also trying to phase out oil from domestic use. Saudi Arabia aims to stop burning as much as 1 million barrels a day of crude in its power plants by 2030, instead using solar, wind and natural gas. Iraq is spending billions of dollars to ramp up gas output.

The Gulf Arab economies are among the world’s biggest oil consumers on a per capita basis, in part because of their heavy use of crude in their electricity grids.

Kuwait, one of OPEC’s biggest oil producers, needs to buy LNG from abroad since it pumps little gas of its own. The oil diverted from power plants will probably be exported.

The country has a 15-year contract with state-owned Qatar Petroleum to buy 3 million tons of LNG a year for Al Zour. It plans to buy another 3.5 million tons a year from other suppliers. Until now, Kuwait has mostly imported LNG via floating storage and re-gasification units.

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