Page 12 - MEOG Week 29 2021

MEOG PROJECTS & COMPANIES MEOG

KOC to drill oil wells, cancels gas projects

KUWAIT STATE-OWNED Kuwait Oil Co. (KOC) intends capital spending in its 2020-2025 five-year plan.
to drill more than 750 wells in the north of the JPF-6 and JPF-7 were expected to have cost
country as it seeks to increase its oil production $1-2bn to complete and were to have had a
capacity despite shelving plans for nearby gas total capacity of 300mn cubic feet (8.5mn cubic
development. metres) per day of gas.
Company sources were quoted on both topics “KOC decided to cancel those projects as
by the local Arabic language daily Al-Anba, not- part of spending rationalisation plans and opt
ing that the oil well drilling forms an important instead for expansion of the existing facilities,”
stage of achieving its output capacity target of one source was quoted as saying, noting that the
4mn barrels per day by 2040, up from the current projects were central to KOC’s target of achiev-
3.1-3.2mn bpd. In 2019, Kuwait said it would ing 950 mmcf (26.9 mcm) per day of free gas
reach the 4mn bpd level by the end of 2020, with capacity by 2023.
capacity to grow to 4.75mn bpd by 2040, but In April, KOC received bids for contracts to
the targets were realigned as the impact of the construct the facilities for JPF-4 and 5. Sources
coronavirus (COVID-19) on spending was felt. said at the time that the lowest bids were submit-
In 2020, Kuwait produced an average of 2.43mn ted by Chinese company Jereh Oil & Gas Engi-
bpd, having fallen to 2.085mn bpd in June last neering Corp. – $490.6mn for the JPF-4 – and
year. local firm Spetco International Petroleum Co.
The sources said that KOC had invited three – $489.4mn for JPF-5.
international oilfield specialists – Halliburton, Meanwhile, the timing of the apparent can-
Schlumberger and Weatherford, all of the US cellation of the gas projects is noteworthy, com-
– to submit financial and technical bids for the ing shortly after the first 213,000 cubic metre
project. They noted that there are likely to be cargo of Qatari LNG arrived at the emirate’s new
several rounds of negotiations until agreement LNG Import (LNGI) terminal at the southern
is reached on price. downstream hub of Al-Zour.
In February, Halliburton won a contract to
collaborate on expanding digital solutions for Ratings review
the company’s North Kuwait asset. Also last week, S&P Global Ratings downgraded
KOC, a subsidiary of industry parent Kuwait Kuwait’s sovereign rating from AA- to A+ amid
Petroleum Corp. (KPC), is reportedly keen concerns about budget deficit, uncertainty about
to carry out the integrated drilling work on all funding and the downbeat oil sector.
northern fields under one project. It said: “The negative outlook primarily
reflects risks over the next 12-24 months relating
Gas cutback to the government’s ability to overcome the insti-
Meanwhile, the company is said to have can- tutional roadblocks preventing it from imple-
celled plans for the development of the Jurassic menting a financing strategy for future deficits.”
gas production facilities (JPF) 6 and 7, as KOC The ratings agency said it expects Kuwaiti
continues to face pressure to reduce its capital oil production will fall to 2.39mn bpd this year
programme. “before rebounding to 2.78mn bpd in 2022,
A study by US-based Strategy& remains 3.1mn bpd in 2023 and 3.2mn bpd in 2024”.
ongoing for the restructuring of the sector and However, it noted that “a stronger recov-
reducing KPC’s affiliates from eight to four. ery should follow in 2022 and 2023, with GDP
The study began last year as KPC was forced growth averaging 7% as OPEC+ cuts end and
to reassess its capital programme, and reduced Kuwait ramps up production”.™

P12 www. NEWSBASE .com Week 29 21•July•2021