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By Ulf Laessing
KUWAIT Oct 22 Kuwait said on Monday it had reached a preliminary deal with Exxon Mobil Corp (XOM.N) to produce heavy oil in the north of the Gulf Arab state and aimed to boost production to 900,000 barrels per day by 2020.
State owned Kuwait Oil Company (KOC) said it wanted to reach a final deal with the U.S. company to explore the Lower Fars oil field near the Iraqi border by July 2008 but negotiations were still ongoing.
Exxon Mobil said the deal would be to produce 700,000 barrels per day (bpd) from the field, while KOC, which is in charge of oil exploration in the world's seventh-largest oil producer, added that it also wanted to explore other fields to reach its long-term target.
"The agreement has several stages," said Khaled al-Sumaiti, deputy managing director of KOC's northern oilfield operations.
Kuwait, which sits on about 10 percent of global reserves, aimed to produce 50,000 bpd of heavy oil by 2011 and 250,000 bpd by 2015 as part of plans to boost its total oil output to 4 million bpd by 2020, he said.
"This is a tight schedule but we will work hard to reach this goal," Sumaiti told an oil conference.
The plan faced several challenges, including a lack of skilled workers and a problem with mines that have littered the northern area since the 1991 Gulf War, which ended seven months of Iraqi occupation of Kuwait, he said.
NO PARLIAMENTARY APPROVAL NEEDED
Richard Vierbuchen, Exxon Mobil's vice president for the Caspian Sea and the Middle East, said the talks were about producing 700,000 bpd from northern Kuwait but declined to provide more details.
"Kuwait has very ambitious heavy oil plans ... We're working very closely together," he said.
Hashem al-Rafai, the head of Kuwait's northern oil field exploration, dubbed Project Kuwait, said the Exxon Mobil deal did not need approval by parliament, where several government plans are stuck due to a standoff with deputies.
"We don't need approval for this. This is an enhanced technical service agreement," he told reporters.
Kuwait has been planning a multi-billion project to explore its northern oil fields for more than a decade but it has never made beyond committee level at parliament as some Islamist deputies oppose the involvement of foreign firms.
Two years ago, Kuwait estimated the cost of the project at $8.5 billion.
Independent Kuwaiti oil analyst Karmal Harmi said the Gulf state would not be able to reach its heavy oil targets without the help of international firms. "We need them," he said. (Additional reporting by Lin Noueihed in Dubai) (Reporting by Ulf Laessing, editing by Anthony Barker. Kuwait Newsroom, +965 246 0350, email@example.com, Reuters Messaging: firstname.lastname@example.org))
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