Kuwait is looking to increase natural gas production from new and existing fields in an effort to wean the local electricity sector off using oil as a main feedstock.
Sami Al-Rushaid, the chairman and managing director of the Kuwait Oil Company, told a conference on November 29 that the emirate plans to raise gas production to 127m cubic metres a day to meet domestic demand. Kuwait currently produces around 32m cu m, with all but 4m cu m a by-product of its oil extraction industry.
However, while Kuwait is believed to have ample untapped domestic reserves, with estimates of some 1.7trn cubic metres, even the planned increase may not meet daily shortfalls. According to Al-Rushaid, demand will rise from the present level of around 62m cu m a day to 141m cu m by 2030, more than double present consumption, and four times current local production.
This has raised concerns over a long-term gap, which Farouk Al-Zanki, the chief executive of Kuwait Petroleum Corp (KPC), acknowledged during an industry conference in Doha on November 30. "The plan is to burn less oil than gas, but if worse comes to worse we will continue to use expensive fuel," said Al-Zanki.
Some of the projected increase in gas production will result from KPC's plans to boost oil output by around 33% by 2020, with the associated gas adding to the resources available to the utilities sector. However, the greatest increase will come from dedicated gas exploitation projects.
The development of new gas reserves for use by the power industry is becoming a higher priority, and the Ministry of Electricity and Water plans to invest $21bn over the next four years to boost water and electricity production.
However, plans to better exploit gas reserves depend to some extent on striking an agreement with Iran over the development of the offshore Dorra field, which lies between the two neighbours, as well as Saudi Arabia, and is estimated to contain non-associated gas reserves of between 370bn and 566bn cubic metres. However, while Kuwait and Saudi Arabia reached a deal on their shared maritime border in 2000, no such treaty has been signed with Tehran.
The dispute between Kuwait and Iran has stretched over some five decades and does not appear much closer to resolution, though talks are continuing.
While preparing to boost spending on its gas sector, Kuwait still plans to focus most of its upstream and downstream energy investments on oil production. On November 29, KPC announced plans to spend $90bn in the next five years as part of its strategy to boost oil production capacity to 4m bpd by 2020.
© Oxford Business Group 2010
