US major Chevron will be the lead technology collaborator on a 20 year, multi-billion dollar project to double the production capacity of the shared Neutral Zone between Saudi Arabia and Kuwait, according to latest reports.
Kuwait Gulf Oil Company (KGOC) has said it plans to invest US$11 billion in the Neutral Zone, aiming to almost double production capacity to 900,000 b/d with Saudi co-operation. The programme will cover all exploration, development, and existing field and production facility expansion, representing Kuwait’s 50% share in the Zone’s investment needs as well as output.
“Much of the additional output will come from Chevron’s al-Wafra field steam injection project (with a pilot project coming onstream in September), envisaged to raise heavy oil recovery rates from around 5% to 40%, costing some US$10 billion (half of this capital from Kuwait),” explained Samuel Ciszuk, IHS Global Insight Middle East energy analyst.
KGOC chairman Bader al-Khashti told newswire Reuters that reaching the target would be done in stages over the next two decades. “I think a fair target of the Neutral Zone is to go for between 350,000-450,000 bpd as Kuwait’s share by 2030,” said Al Khashti, confirming that this year’s total target of 624,000 b/d would be missed. Production stands around 538,000 b/d at present.
Last year Chevron saw its long-term concession for production from the Neutral Zone renewed, on behalf of the Saudi share, after successfully testing new technology.
“Chevron’s new technology is at the heart of Neutral Zone development, and the US major’s extension was seen by Saudi Aramco as an opportunity to glean technology knowledge for an industry segment likely to grow in future importance,” explained Ciszuk.
Kuwait cancelled a Japanese consortium’s concession for its part of the Zone some years ago for largely resource-nationalistic reasons but, as in Kuwait proper, it has struggled more than Saudi Arabia in facilitating technology transfers and retaining expertise. “The Kuwaitis seem to think the same, bringing little plans of their own to the table—except for the poisoned chalice of Dorra,” added Ciszuk.
The Dorra field is a 10km by 7km field containing sour oil and over 35 TCF of non-associated gas. This straddles the territorial waters of Kuwait, Iran and Saudi Arabia. Kuwait has been negotiating with Tehran and Riyadh on development of the field’s gas reserves. Kuwait needs the gas for its domestic market
KGOC targets spending of US$1.17 billion this year alone on al-Wafra and the offshore al-Khafij field. The state-owned company also plans to press ahead in the disputed Dorra gas field, developing the Saudi and Kuwaiti sections jointly with Saudi Aramco subsidiary Aramco Gulf Operations while staying clear of the area claimed by Iran. Development is expected to cost US$4–5 billion, with the field coming onstream by 2017.
