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Kuwait Needs To Secure 5,000 MCF/Day Of Gas From Local Fields & Neighbours.

Kuwait's requirements of 5,000 MCF/day (51.5 BCM/year) of natural gas by 2020 must be met from the following sources: the emirate's own gas, both free gas found in 2006 and gas associated with its oil production; imports from neighbouring Iran and Qatar through pipelines and in LNG form; and development of the offshore Dorra gas field in the Divided Zone (DZ), which is shared equally by Kuwait and Saudi Arabia but which partly straddles the maritime borders with Iran.

In 2006, the government announced its first major non-associated gas discovery in the north of the country, and estimated the reserves at about 1 TCM. The country then and later discovered large quantities of light oil and associated gas. Now Kuwait Oil Co. (KOC), a unit of the state-owned Kuwait Petroleum Corp. (KPC), is producing 175 MCF/day from this reserve at the Sabriya/Umm Niqa system and the gas output should rise to 1,000 MCF/day (10.3 BCM/year) by 2015 (see omt23KuwtFieldsJun8-09).

Kuwait already is producing 1,000 MCF/day of associated gas which is mostly supplied to the emirate's LPG export plants (see below).

Kuwait has secured preliminary agreements to purchase natural gas from Iran and LNG from Qatar. Plans to import from southern Iraq have failed as Baghdad says it may need all the gas it can get. It seems finalising the deal with Iran will depend on an agreement over Dorra which is already being developed, while a final accord with Qatar is yet to be signed.

LNG Import Terminal Ready In Mid-'09: With Kuwait's gas market set to grow faster than that for oil, the emirate's 5.2m t/y (500 MCF/d) LNG import terminal is being built on fast-track basis and should be ready in mid-July to receive liquefied methane from Qatar and re-gasify it for local use. But there is likely to be a delay in Qatari LNG deliveries, supposed to begin in the summer, because Train-6 of Qatar's RasGas JV from which supplies should begin will not be on stream in time.

KPC is yet to finalise a long-term LNG supply contract with RasGas as negotiations over price and delivery schedules continue. KPC wants to limit its purchases to the summer months, when Kuwaiti demand for electricity peaks, as the LNG storage space at the receiving terminal will be limited. KPC and RasGas have been negotiating an initial volume of 1.6m per annum for five years, but with shipments to be made during the summer months. On Feb. 19, 2009, RasGas marketing executive Khaled Sultan al-Kuwari mentioned this volume on annual basis and said: "We are in the final stages of negotiations with Kuwait Petroleum Corporation to supply LNG to Kuwait. We are discussing a five-year term to supply the gas by ships only during summer.

RasGas Managing Director Hamad Rashed al-Muhannadi then said: "Our target is to conclude the discussions before [the summer] and the supply to be done during this summer" He said supplies will begin as soon Train-6 was to start up, which may not be on stream before late August or September - i.e, missing Kuwait's target to receive the LNG for the 2009 peak gas demand season.

An APS source in Kuwait on May 30 said KPC was trying to secure some shipments from the existing RasGas trains under a shot-term deal. But the source could not get a confirmation that such a deal will be done soon.

Already the shortage of gas has forced KPC's unit Petrochemical Industries Co. (PIC) to close some fertiliser plants. The closure has allowed to divert its methane feedstocks to the power plants (see news22KuwtEnBaseJun1-09).
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Publication:APS Review Gas Market Trends
Date:Jun 15, 2009
Previous Article:The Gas Sector.
Next Article:Betting On Qatar Link Up With Nabucco Pipeline Via Kuwait.

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