On 20 May, members of parliament deferred a debate on a preliminary report presented by a National Assembly finance and economic committee.
‘There are two aspects to the project – the procedural, which includes an operating service agreement [OSA] to be signed with the international oil companies [IOCs] and the legal. We are making good progress with the OSA and the legal issue will be resolved soon,’ says a KPC official.
Oil Minister Adel Khaled al-Sabeeh in a mid-August interview with MEED said that KPC was finalising the fiscal term documents and the legal draft contract agreement. ‘On the political side, we’re due for discussions at the end of this year or early next year for the enabling law,’ he said (MEED 31:8:01, Cover Story).
‘We have covered all aspects of the project and will present a final report by the end of this year,’ says Abdulwahab al-Haroon, an independent member of parliament (MP) and chairman of the assembly finance and economic committee. A delegation of MPs and officials from the Oil Ministry is scheduled to visit Saudi Arabia and Iran in mid-December to study their models for opening up the upstream oil sector to IOCs.
Another issue which the National Assembly will need to resolve concerns taxes on foreign investors. Kuwait’s commercial laws call for the levying of a 55 per cent income tax on international companies. ‘We made a provision to reduce it to a level that will not discourage IOCs from signing the OSA,’ says the KPC official. Analysts say that a 25 per cent tax has been proposed.
So far, the 24 IOC’s prequalified for the roles of operator and non-operator on Project Kuwait have obtained data on the five northern oil fields. The next stages are:
KPC will invite IOCs to submit their assessment of the data by the end of this year;
In early 2002, KPC will hand over the proposed fiscal terms for the OSA, which will be used by IOCs to submit development plans by March;
KPC will evaluate the development plans and prepare a shortlist of bidders. Each consortium of IOCs will submit proposals by the end of 2002. Selection is expected in early 2003
Project Kuwait is a $7,000 million scheme aimed at enlisting the support of IOCs to double oil production at the northern oil fields to 900,000 barrels a day by 2005 (MEED 18:5:01, Cover Story).