Page 7 - MEOG Week 43 2021

MEOG PRICES & PERFORMANCE MEOG

Kuwait voices upstream optimism

KUWAIT KUWAIT this week outlined plans to bring for- mainland Kuwait with around 350,000 bpd
ward its ambitious crude oil production target coming from the PNZ. With PNZ output shared
as the emirate doubles down on hydrocarbons 50:50 by Kuwait and Saudi, this infers a full
developments as its neighbours pivot to embrace output slate of 700,000 bpd, well above historic
the energy transition. capacity of 500,000-550,000 bpd.
Over the past week, Kuwait’s Ministry of The PNZ’s 550,000 bpd capacity is shared
Oil (MoO) and state-owned Kuwait Petroleum between the 300,000 bpd offshore Al-Khafji and
Corp. (KPC) said separately that Kuwaiti oil out- the 250,000 bpd onshore Wafra oilfields, though
put capacity would reach 3.5mn barrels per day neither asset is understood to have produced at
(bpd) by 2025 and 4mn bpd a decade later, with those levels for around six years, with the fields
the latter target brought forward by five years. shut-in because of disagreements between the
The move comes amid optimism from KPC two governments in 2014 and then in 2015.
about the future of output from the partitioned Operations at Wafra are managed by Wafra
neutral zone (PNZ) shared with Saudi Arabia, Joint Operations (WJO), which is jointly run by
though sentiment from the Saudi side appears KGOC and Saudi Arabian Chevron (SAC), with
to be less positive. the latter representing the Kingdom.
Speaking to the official Kuwait News Agency While environmental and contractual con-
(KUNA), KPC CEO Hashem Hashem said the cerns were cited as the reasons for the lengthy
company’s upstream subsidiary Kuwait Oil Co. shut-in, Middle East Oil & Gas (MEOG) under-
(KOC) would achieve the increase through work stands that divisions within the Kuwaiti govern-
on gathering centres, the expansion of water ment and continuing discomfort regarding the
handling and water injection facilities as well as key role played by Chevron in operations were
upgrades to existing Jurassic production facil- the key factors preventing a restart.
ities and the addition of new production units The US company’s concession for Wafra was
and wells. renewed by Saudi Arabia without first consulting
KOC’s projects included: “Upgrading current Kuwait.
Jurassic production facilities and establish two The operation of Khafji is less contentious,
additional facilities to increase light crude pro- with KGOC partnered by Saudi Aramco subsid-
duction. This plan will be implemented in com- iary Aramco Gulf Oil Co. (AGOC) in the Khafji
bination with an integrated drilling programme Joint Operations (KJO) entity.
of 500 wells per year on average and around In April, Saudi energy minister Prince Abdu-
2,000 wells workover,” according to KUNA. laziz bin Salman said the Kingdom’s share of
Hashem said the drilling campaign would be PNZ output was 135,000 bpd of a total 270,000
carried out using 71 drilling rigs and 62 worko- bpd and Hashem said that pre-2015 levels would
ver rigs working across Kuwait. be reached next year.
In September a company source was quoted However, speaking to S&P Global Platts
telling the local Arabic language Aljarida daily this week, a source working on the Saudi side
that KOC would drill an extra 300 wells per year, cast doubt over such optimism, saying that net
taking the annual total to 700, as part of a $6.1bn Saudi output from the PNZ was running at “just
capital expenditure on exploration activities over under” 100,000 bpd, implying a total below
the next five years. 200,000 bpd.
Meanwhile, KOC published its 2020 annual He said that Hashem’s target was unlikely
report which showed the company’s maximum to be reached, noting that technical challenges
sustainable oil production capacity at 2.579mn would likely mean output would be capped at
bpd as of the end of March. This marked a around 400,000-450,000 bpd over the next five
572,000-bpd reduction over a period of three years, noting that reaching 500,000 bpd would
years. The bulk of the decline has occurred in be a “great achievement”.™
south-eastern Kuwait, home to the country’s
largest oilfield, Burgan, with capacity down by
nearly 300,000 bpd to sit below 1.4mn bpd.
Hashem said however, that KOC’s output
reduction did not provide a comprehensive pic-
ture of Kuwait’s oil sector performance in general
nor that of KOC, noting that “there are 500,000
barrels per day of potential capacity that is pend-
ing to be unlocked as associated capital projects
and drilling and workover programmes are com-
pleted in the coming two years.”

PNZ portion
Hashem said that around 3.2mn bpd of KOC’s
2025 output capacity would come from

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