ExxonMobil in talks over alliance with Kuwait Oil Company

02 March 2010

Firm to focus on facility integrity management and maintenance

The US’ ExxonMobil is in talks with Kuwait Oil Company (KOC) over the creation of a joint venture oil and gas services company, according to sources with knowledge of the plans.

The state oil and gas operator and the US energy major were not available for comment on the deal, but MEED understands that they have been in talks over the venture since mid-2009.

The company would concentrate on integrity management and maintenance work at KOC’s upstream oil and gas facilities across Kuwait, says one adviser to Kuwait Petroleum Corporation, KOC’s parent company.

It is not clear whether the company would also work on operations or how the joint venture company would be remunerated, with the deal likely to become a controversial one once it is formally announced.

Nationalist members of parliament in Kuwait have long opposed the direct involvement of international oil companies (IOCs) in the production of oil and gas. It is illegal under the emirate’s constitution for a foreign company to own natural resources and the normal production sharing agreements normally used by IOCs are consequently banned.

Exxon has been in talks with KOC over an enhanced technical services agreement (ETSA) deal to develop heavy oil reserves in the northern Lower Fars field since they signed a memorandum of understanding for the project in 2007, but the deal has not resulted in a full contract.

The UK/Dutch Shell Group became the first IOC to sign an ETSA deal with KOC in February. Under the deal, Shell will help KOC develop and manage the northern Jurassic gas fields. The technically complex project will result in the two firms producing undisclosed volumes of non-associated gas from the fields (MEED 18:2:2010).

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