The UK oil major has held a technical services agreement (TSA) with KOC for nearly 15 years, but is looking to convert that to an enhanced TSA, a framework recently introduced by KOC to govern international oil company (IOC) participation in the state’s oil and gas sector.
“We have been talking to KOC for some time about how we can transition from the TSA world, with which we are all familiar, into what they call the ‘enhanced TSA’,” says Tim Marchant, vice-president for Middle East exploration and production at BP.
“We have had long discussions about applying our suite of technologies into a more project-focused approach. This is conventional oil, but getting more out of the conventional reservoirs than would normally be possible.”
BP hopes to reach an initial agreement with KOC in the first half of 2008, according to Marchant.
Explaining the deal, he says normal production processes capture 40 per cent of the oil in place, but enhanced methods boost that to up to 60 per cent – 50 per cent more than is traditionally expected, comprising medium crude and difficult to extract oil that would previously have remained in place.
“It is very exciting because with a country with large reserves based on expected recoveries, every 1 per cent you add to that is significant,” says Marchant.
KOC has already signed an agreement with the US’ Exxon-Mobil Corporation for the production and refining of 700,000 barrels a day (b/d) of heavy oil from its northern oil fields.
It is also understood to be in talks with its other TSA contractors, the US’ Chevron Corporation and France’s Total, as well as the UK/Dutch Shell Group, for additional enhanced TSAs covering deep gas deposits and heavy oil in other parts of Kuwait.
The enhanced TSAs have also raised questions over the future of Project Kuwait, the state’s long-delayed landmark upstream initiative to increase production capacity from four northern oil fields through the involvement of IOCs.
While the scheme is not officially dead and buried, it has certainly been delayed, for now at least.
Marchant remains non-committal on the issue. “I think KOC is looking for multiple mechanisms to reach their targets,” he says.
“Project Kuwait itself would only have contributed 300,000 b/d to the 1.5 million b/d extra needed [to reach the 4 million b/d 2020 target], so KOC has challenged itself to look at other ways to reach that target.”
BP is also active in other parts of the Gulf. It is developing the first phase of its tight gas project in Oman to produce more than 1.5 million cubic feet a day of gas, and in Qatar it is looking closely at the current concession licensing round.