Page 4 - MEOG Week 37

MEOG COMMENTARY MEOG

Ups and downs in

Kuwait’s upstream

Kuwait has been negatively affected by weak oil prices and the coronavirus
(COVID-19) pandemic and has had to cancel a major project dedicated to

the development of heavy oil, though it has launched a tender for gas work.

KUWAIT KUWAIT became the latest major oil producer start of operations in February.
to take action against the challenging backdrop The broader Ratqa asset was discovered in the
of subdued oil prices. late 1970s, but efforts to develop the field were
WHAT: Local media in Kuwait this week have largely stifled until the UK’s Petrofac was finally
State-owned Kuwait Oil reported that state-owned Kuwait Oil Co. (KOC) awarded a $4.2bn engineering, procurement &
Co. has cancelled an 11- has cancelled a project to drill 11 wells as part of construction (EPC) contract to execute the first
well drilling project in the the country’s efforts to expand the production phase in early 2015. This called for production of
north of the country. of heavy oil. 60,000 bpd by this year.
Citing senior company sources, the local According to KOC’s original plan, by 2026/27
WHY: Al-Rai newspaper said that the $400mn contract output from Ratqa would grow to 120,000 bpd,
Meanwhile, a tender has had already been awarded to an international rising to 230,000 bpd by 2030/31, with heavy oil
been launched for the company, but that it was yet to be signed. from the nearby Umm Niqa field seen climbing
construction of facilities The move comes as parent firm Kuwait first to 50,000 bpd and then to 80,000 bpd over
related to its Jurassic gas Petroleum Corp. (KPC), like its counterparts the same period.
development. throughout the region, has reassessed its capital A fourth phase would then see Ratqa’s pro-
programme, and reduced capital spending in its duction lifted to 325,000 bpd, while the final
WHAT NEXT: 2020-2025 five-year plan. phase envisages output from the two fields total-
Spending will continue The sources said that KPC had cited the ling 430,000 bpd.
to come under scrutiny impact of the COVID-19 pandemic and weak Baker Hughes and Halliburton have also
as oil prices remain oil prices as the reasons for the cancellation. One awarded rig contracts over the past 12 months
subdued and demand source said: “There are some projects that were for efforts to increase production from on- and
recovery has a long way listed for implementation or design that can be offshore areas respectively.
to go. stopped, postponed, or re-offered and get lower Kuwait has been attempting to maintain
prices in light of global conditions.” highly ambitious capacity targets of 4mn bpd by
The news is a blow to KOC, which had only the end of this year and 4.75mn bpd by the end of
recently been able to finally begin shipping car- 2040, up from the current 3.1-3.2mn bpd. How-
goes of crude from the Lower Fars Heavy Oil ever, in late 2019, the 2020 target was reported to
Project. Output from the two fields under the have been pushed back to 2040.
project – South Ratqa and Umm Niqa – reached Meanwhile, the board of KOC has also
a first phase plateau of 75,000 bpd following the approved the cancellation of a tender for Phase

P4 www. NEWSBASE .com Week 37 16•September•2020