Committee moves on Project Kuwait

02 September 2005
The National Assembly (parliament) economy and finance committee has made further revisions to Project Kuwait, the committee's chairman Abdelwahab al-Haroon announced in late August. Speaking after concluding the report on the state's landmark initiative, Al-Haroon said that MPs' concerns had been addressed and that the report was now ready to be sent to the legislature for final approval when it reconvenes in October.

The report's most significant recommendation is that the bill is limited to the four northern fields of Ratqa, Rawdhatain, Sabriya and Abdali. The original umbrella draft law, presented to the committee by the government in January, covered the whole state. The government will now have to return to parliament should it seek international oil company (IOC) involvement in other fields. The report also stresses that IOCs will gain no ownership of the state's natural resources.

The committee's other recommendations include a tax rate of 25 per cent on the IOCs' revenues, a minimum local staffing level of 70 per cent, a ban on local agents in negotiations and a minimum of 30 per cent participation from local suppliers.

One Kuwait Petroleum Corporation (KPC) subsidiary - likely to be Kuwait Oil Development Company (KODC) - must have a minimum 5 per cent share in the successful consortium to ensure a transfer of technology.

Al-Haroon said that the cost to the IOCs of developing new or increasing existing production from the fields will be about $1.50 a barrel, considerably less than the $2.50-a-barrel average cost of production throughout the state. The report also recommends that contracted IOCs explore for oil in other areas, including offshore.

It is unclear whether the committee will make any further recommendations. In May, the committee announced that it had finalised its report, raising hopes that parliament would vote on the bill before it rose for the summer recess in June. However, parliamentarians never received the report, and it still remains uncertain when exactly they will do so.

The estimated $8,500 million Project Kuwait calls for the assistance of IOCs in increasing production from the four northern fields by 350,000 barrels a day (b/d) to 900,000 b/d over a 20-year period. The scheme has faced long-running resistance from some legislators who claim it is unconstitutional (MEED 1:7:05; 17:6:05).

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