Page 4 - MEOG Week 33 2021

MEOG COMMENTARY MEOG
PNZ pipes gas as court backs Chevron
Gas has begun flowing from the partitioned area between Kuwait and Saudi Arabia through the area’s first pipeline while a US court has denied an appeal pertaining to historic rents
KUWAIT/SAUDI
WHAT:
The gas pipeline has started taking volumes of gas from the Al-Khafji oilfield where efforts are ongoing to ramp up production.
WHY:
Kuwait and Saudi are producing a combined 270,000 bpd of crude from the PNZ.
WHAT NEXT:
Complications around Chevron’s involvement in the zone are understood to have prolonged the slow resumption of operations at the Wafra oilfield.
A new pipeline was launched last week to carry gas from the Partitioned Neutral Zone (PNZ) to networks in Kuwait while a US court denied a lawsuit by heirs of a Saudi official relating to his- toric land rent.
The new pipeline provides Kuwait with addi- tional feedstock at a time when the Emirate recently launched a regasification terminal and is proceeding with work to develop its sizeable Jurassic Gas deposits.
PNZ update
Kuwait Gulf Oil Co. (KGOC) said last week that operations had begun on the first pipeline from the Al-Khafji field in the PNZ, with 24mn cubic feet (680,000 cubic metres) of gas transported to networks belonging to Kuwait Oil Co. (KOC).
The company reported that operating the pipeline would “boost optimum use of the petro- leum resources” in the PNZ while meeting “local needs for gas, particularly at peak consumption times”.
KGOC praised its partner in the Khafji Joint Operations (KJO), Saudi Aramco subsidiary Aramco Gulf Co-operation Co. (AGOC), for its help in “accomplishing the high feasibility gas project”.
In April, sources from both Kuwait and Saudi
said that they were moving towards ramping up efforts in PNZ following an OPEC+ agreement to gradually ease output restrictions.
The sources said that the cuts have given the neighbours an opportunity to carry out rehabil- itation work to address subsurface, seismic and geological issues and prepare the Al-Khafji and Wafra fields to reach their former heights.
At capacity, Khafji and the onshore Wafra oilfield can produce around 550,000 barrels per day (bpd); however, the fields were shut because of disagreements between the two governments in 2014 and then in 2015.
Operations at Wafra are managed by Wafra Joint Operations (WJO), which is jointly run by KGOC and Saudi Arabian Chevron (SAC), with the latter representing the Kingdom.
While environmental and contractual con- cerns were cited as the reasons for the lengthy shut-in, Middle East Oil & Gas (MEOG) under- stands that divisions within the Kuwaiti govern- ment and continuing discomfort regarding the key role played by Chevron in operations were the key factors preventing a restart.
The US company’s concession for Wafra was renewed by Saudi Arabia without first consulting Kuwait.
One source told Platts: “They are doing a lot
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w w w . N E W S B A S E . c o m Week 33 18•August•2021