Thursday, Nov 12, 2009
By Dania Saadi
Of ZAWYA DOW JONES
KUWAIT CITY (Zawya Dow Jones)--Kuwait and Saudi Arabia may spend $22 billion over the next 20 years to boost oil and gas output from the shared divided zone as the two OPEC members seek to meet global demand for crude and cater to rising domestic gas needs, a senior Kuwaiti official said.
Kuwait Gulf Oil Co., or KGOC, a unit of state-run Kuwait Petroleum Corp., has a tentative budget to spend 3.135 billion Kuwaiti dinars ($11 billion) in the next 20 years on boosting oil and gas production in the so-called Partitioned Neutral Zone, or PNZ, an area that Kuwait and Saudi share, the company's chairman told Zawya Dow Jones in an interview.
KGOC handles Kuwait's 50% share in the offshore and onshore fields in the PNZ, where total crude oil production capacity currently stands at about 560,000 barrels a day.
"This is what KGOC might spend in the next 20 years in the divided zone completely, with an equal number from the Saudi side," Bader Al Khashti said Tuesday, speaking at the company headquarters in Ahmadi. "The $11 billion figure could be bigger. We put an initial number for cost for seismic work and few development, but not full development."
For the next five years, KGOC has a capital expenditure plan of KWD1.43 billion for oil and gas developments in the divided zone as part of the proposed $11 billion budget, and a similar amount is expected from the Saudi side, he added.
KGOC and its partners on the Saudi side plan to raise oil production capacity to 700,000 barrels a day from 2015 and produce 800 million standard cubic feet a day of non-associated gas from offshore fields starting 2017, he said.
Under the 20-year investment plan, overall oil output capacity may reach as much as 900,000 barrels a day, depending on exploration work and development of existing fields.
CLEARER PICTURE
"It is too early to confirm the figure of 900,000 barrels a day. The 700,000 barrels a day figure is based on the existing ability, but with exploration planned by 2014 in Wafra and once we complete the seismic work we will have a clearer picture for potential development," Khashti said.
Kuwait's oil production increment from the PNZ is part of an overall plan to raise crude output capacity by a third to 4 million barrels a day by 2020 from about 3 million barrels now.
Next year, oil production capacity in the PNZ might reach 600,000 barrels a day in the second or third quarter, Khashti said.
KGOC is working on maintaining oil production in the onshore field of Wafra, where light oil production is declining and is expected to be offset by a hike in heavy oil output.
U.S. oil major Chevron Corp. (CVX), KGOC's partner in the onshore fields on the Saudi Arabian side, is undertaking a steamflood pilot project for the heavy oil reservoirs in Wafra to help boost heavy crude output. Saudi Arabia's Arabian Gulf Oil Co. is KGOC's partner in the offshore fields within the PNZ.
Steamflooding is an enhanced oil recovery, or EOR, technique that injects steam into heavy oil reservoirs, increasing temperature underground to allow heavy oil, which is difficult to pump, to be extracted.
KGOC hopes steamflooding will help boost the rate of recovery of heavy oil in Wafra to 20-25% from about 5% now, Khashti said.
The PNZ investment plan excludes potential costs of developing the offshore Dorra gas field, which is also claimed by Iran. Kuwait and Iran have yet to demarcate their maritime borders.
"We are working in the non-disputed area," Khashti said.
-By Dania Saadi, Dow Jones Newswires, +9714-364-4960; dania.saadi@dowjones.com
Copyright (c) 2009 Dow Jones & Co.
(END) Dow Jones Newswires
12-11-09 0549GMT
