Kuwait has just launched one of the biggest upstream oil projects in the Middle East. State upstream operator Kuwait Oil Company (KOC) hopes to develop its considerable heavy oil deposits in the north of the country. By 2017, it aims to produce 60,000 barrels a day (b/d). Output is expected to have reached 270,000 b/d by 2030.
Compared with other regional upstream projects, the figures appear modest. However, the Lower Fars heavy oil development has been issued under a single engineering, procurement and construction contract. Its budget, estimated at $4.2bn, sets it apart from anything else in the region.
Parliament has attempted to block almost all attempts by Kuwait Oil Company to bring in outside help
Lower Fars is part of Kuwaits long-stated aim of boosting oil production from just over 3 million b/d today to 4 million b/d by 2020. Nizar al-Adsani, chief executive officer of Kuwait Petroleum Corporation, has called for the help of international oil companies, particularly in transferring technology. Without assistance, the target may remain out of reach.
But luring international firms has not been easy. Kuwait signed a preliminary agreement with US oil major ExxonMobil in 2007 to help develop the heavy oil deposits, which total some 13 billion barrels. But the agreement with ExxonMobil has not moved on, leaving KOC to rely on consultants and engineering firms to provide technical support. There is little sign that progress has been made on reaching a solution that would allow KOC to meet its objectives without eroding Kuwaits constitution, which forbids foreign firms from owning any of the countrys natural resources.
It remains to be seen if Kuwaits fractious politics will hamper progress on Lower Fars. Several other oil schemes have been delayed and parliament has attempted to block virtually every attempt by KOC to bring in outside help. Whatever happens, parliament is bound to be watching developments closely.