Kuwait struggles to compensate for lost production

11 August 2015

Jurassic field developments rushed out amid scramble for extra oil revenues

On 9 August, upstream operator Kuwait Oil Company (KOC) invited companies to bid on a new scheme to develop four oil and gas fields in its Jurassic basin. The project is expected to add 120,000 barrels of oil equivalent a day (boe/d) to Kuwaiti production.

The move is part of a drive to compensate for lost production in the Divided Zone, which is shared with Saudi Arabia and which saw its oil and gas production reduced to zero earlier this year amid an ongoing dispute over land use.

The drive includes another Jurassic field development project, which is expected to be tendered around the third quarter of next year and will eventually bring 180,000 barrels a day of extra capacity online.

These two projects have an estimated total capacity of 300,000 boe/d made up of both oil and gas and, along with additional plans for offshore drilling, should eventually compensate for the lost oil production from the Divided Zone, which was supplying Kuwait with just over 250,000 b/d of oil in October last year before the closure of the Wafra and Khafji fields.

However, it could be years until the planned upstream projects are fully operational and the damage done to the Kuwaiti economy in the short term could be significant.

The loss of the Divided Zone production is worth about $12.5m a day to Kuwait. Additionally, the shutdown comes at a time when Kuwait’s GCC peers are ramping up production and exports in a battle to secure market share in Asia and in an attempt to compensate for lower oil revenues due to low oil prices.

This could lead to Kuwait losing market share to other GCC nations, something that may be difficult to reverse when the new production comes online.

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