By Simon Webb
KUWAIT Feb 4 OPEC-member Kuwait is sticking to
its 2020 oil output capacity target of 4 million barrels per day
but faces challenges in finding contractors, technology and
skilled labour, a state oil official said on Monday.
"We are very determined to (meet the target) and are working
aggressively," said Saad al-Shuwaib, chief executive of
state-owned Kuwait Petroleum Corporation (KPC).
The country is spending $51 billion on its oil and gas
sector from 2008-2012 to overhaul existing infrastructure and
build new capacity. The world's seventh-largest oil exporter's
output capacity stands at around 2.8 million bpd.
Kuwait, like other oil producers worldwide racing to bring
new projects online, was facing challenges in finding
contractors, skilled labour, buying technology and meeting
environmental standards, Shuwaib said at a conference.
Analysts say political divisions will make it hard for
Kuwait to meet the target, as expansion plans include the
long-delayed Project Kuwait to boost output in the country's
Kuwait has for years been looking into allowing foreign
firms to enter its hydrocarbons sector to carry out large
exploration projects, mainly in the north of the country, which
sits on around a tenth of the world's proven oil reserves.
But the government has made little progress gaining approval
from lawmakers who oppose the multi-billion dollar Project
Kuwait. Shuweib said he was confident the plan would eventually
"CONTRACTS ON STEROIDS"
Shuweib also said KPC hopes to sign enhanced technical
service contracts with international oil companies this year.
Kuwait signed a preliminary deal with Exxon Mobil Corp
(XOM.N) in October to produce heavy oil in the north of the Gulf
Arab state. It is discussing similar contracts with BP (BP.L)
and Chevron Corp (CVX.N), Shuwaib said.
These contracts are not a replacement for Project Kuwait but
designed to run in tandem with it, another KPC Official said.
The new service contracts allow the firms a bigger role in
the operations than old contracts with the same firms, the KPC
"These are like the old contracts on steroids," he said.
"They encompass more activities but don't come close to the
constitutional prohibition (on the role of foreign oil companies
in Kuwait's upstream sector)."
The Gulf Arab country was set to begin importing liquefied
natural gas (LNG) in the summer of 2009 and was currently
working on facilities that would allow the import of 500 million
to 750 million cubic feet of gas per day (cfd), Shuwaib said.
Those facilities should be completed by the end of the year, he
Kuwait is short of gas for power generation during the peak
period of electricity demand in the summer, when the country
often suffers from blackouts. It also needs the fuel as a
feedstock for its growing petrochemicals industry.
Shuwaib declined to say where Kuwait would buy its gas. The
second KPC official said that Qatar was among several countries
it was talking to, but it had yet to strike any deals.
"We are still pursuing very aggressively short-term LNG
import options," the official said. "We need the gas to tide us
To boost its gas output, Kuwait will spend $8 billion to $9
billion over the next seven years, said Mohammed Ahmad Husain,
an executive at state-owned upstream unit Kuwait Oil Company,
speaking at the same conference.
Fields of pure gas, not associated with oil output, should
begin producing for the first time in March, Husain said, three
months later than planned.
Output will start at around 175 million cfd in March and
should rise to around 600 million cubic feet by 2010-2011,
The country hopes to reach total output of 1 billion cubic
feet per day by 2015-2016. The first gas will come from the Umm
Niqa field where Kuwait says it had found an estimated 35
trillion cubic feet of non-associated gas along with large
amounts of condensates in the north in March 2006.
(Writing by Lin Noueihed, editing by James Jukwey)