Saudi Arabia and Kuwait have planned to build gas and natural liquids (NGL) collection and distribution facilities at the Khafji oilfield, Al-Khafji Operations Company (KJO) said, according to Reuters.
Khafji, which is in the Neutral Zone between the two countries, is located in the far northeastern tip of the Saudi Kindom facing the Arabian Gulf, has oil capacity of around 610,000 bpd, KJO wants to increase this figure to 700,000-900,000 bpd by 2030.
Engineering firms have until September 27 to submit their bids for the project, which is estimated to cost at least US$50 million, KJO said. It did not provide further details about the project.
“They want to collect the gas, which is being flared, and distribute it to Kuwait and Saudi,” an industry source told Reuters.
KJO is split between Aramco Gulf Operations, a subsidiary of state oil firm Saudi Aramco, and Kuwait Gulf Oil Co (KGOC).
The Middle East sits on 40% of the world’s gas reserves and yet suffers from a supply shortage, the news agency said. The only country in the Gulf with gas to spare is Qatar. The rest of the region would burn more if it could.
Most of the gas produced by both OPEC members is a by-product of oil output, so when they pump less crude, they pump less gas. Tight supply has been exacerbated by Saudi Arabia’s and Kuwait’s adherence to OPEC’s oil output curbs since December 2008.
Kuwait and Saudi Arabia were discussing removing the zone from inclusion in OPEC output curbs and transferring reductions there to other fields outside the zone, Bader al-Khashti, the managing director of KGOC told Reuters in April.
Kuwait is plugging the gap between supply and demand with imports of liquefied natural gas (LNG).
Saudi Arabia has switched its focus to gas exploration after it completed a massive crude expansion programme last year.
