Kuwait Oil Company (KOC) is in talks with three oil majors to develop the country’s heavy crude oil resources.

The state-run company has held talks with UK/Dutch Shell Group, France’s Total and the US’ ExxonMobil. This is despite Kuwait’s recent tender for temporary heavy oil handling and processing facilities in the north, which was seen by many as a sign that the country intended to develop the technically complex heavy oil production without the assistance of international oil companies (IOC).

Contractors have been asked to submit prequalification applications to KOC by 30 May. The winning firm will be required to provide financing for the project, which could cost as much as $2bn, according to contractor sources (MEED 9:5:10).

KOC has planned to develop its northern Adbali, Ratqa, Raubhatain and Sabriyah fields with the help on an IOC. KOC has been in protracted talks with ExxonMobil for almost four years, says one source, and signed a heads of agreement with ExxonMobil to work on the fields in October 2007. Since then no progress has been made.

In April, Shell signed a enhanced technical services agreement (ETSA) worth almost $800m with KOC covering the development of gas from the northern Jurassic gas fields,  (MEED 13:04:10).

The gas deal makes a further heavy oil agreement with Shell difficult, says one source, KOC will be wary of accusations that it has given the company too much.

According to a Kuwait City based consultant, with strong ties to Kuwait Petroleum Corporation (KPC), Kuwait will have to bring in IOCs at some point, but the negotiations will be extremely difficult. KOC has no experience with heavy oil, the consultant explains, and they could spend the next 30 years learning rather than bring in an IOC with expertise.

“Kuwait can only get a technical service agreement [TSA] past parliament”, says the consultant.

Under Kuwait’s constitution it is illegal for foreign companies to own any of the country’s natural resources, making the traditional production sharing agreements usually employed by IOCs impossible to use.

“But IOCs have a problem with not being able to book reserves” says the consultant.

Kuwait has an estimated 13 billion barrels of heavy crude oil reserves, located primarily in the north of the country. Kuwait had planned to produce as much as 900,000 barrels a day (b/d) of heavy crude by 2020. This number has been cut sharply, and Sami al-Rushaid, KOC’s chairman now says Kuwait seeks to produce only 270,000 b/d of heavy oil as part of its plan to reach 4 million b/d.