Kuwaiti gas import projects move one step forward

17 January 2003
Kuwait Petroleum Corporation (KPC) signed on 12 January a memorandum of understanding with state-owned National Iranian Oil Company (NIOC) to import natural gas from Iran through a subsea pipeline (MEED 31:5:01, Cover Story).

In addition, progress on the Qatar-Kuwait pipeline, which was slow, following strains in relations between Qatar and Saudi Arabia, is expected to pick up steam with a recent Saudi Arabian decision allowing Al-Khaleej Gas Pipeline Company (AKGPC), the new name for ExxonMobil and Qatar Petroleum's (QP) enhanced gas utilisation (EGU) scheme at the Qatari North field, to use its territorial waters. AKGPC is expected to sign a maritime agreement with Saudi Arabia for use of its territorial water for the construction of the pipeline.

In the proposed Iranian project, at least 300 million cubic feet a day (cf/d) of lean and rich gas is planned for import, with first delivery planned in mid-2005. The gas is likely to be sourced from offshore fields adjacent to the Neutral Zone, shared by Kuwait, Iran and Saudi Arabia.

'A detailed study is due to be completed by the summer on the outline agreement [MoU] we signed in Tehran. The next phase [in the project implementation] will be defining specific volumes, the route and the price of gas,' says a KPC official.

Iranian gas will be used as feedstock to meet the increase in capacity for power generation and water desalination. The Ministry of Electricity & Water plans the construction of two new greenfield power plants of total capacity 3,500 MW at Al-Zour and a new 50-million-gallon-a-day desalination plant at Subiya by 2005/6.

KPC is also looking to import gas from Qatar. In January 2002, the governments of Qatar and Kuwait signed the protocol for a gas sale and purchase agreement (SPA) for the proposed gas pipeline from Ras Laffan to Kuwait. A second agreement was also reached on the same day by KPC, QP and ExxonMobil Gas Marketing, part of the US' ExxonMobil, covering the project's term sheet(MEED 1:2:02).

The proposed 590-kilometre-long main gas export line will transport at least 1,000 million cf/d of Qatari gas to Al-Zour South in Kuwait by early 2006. Construction of the pipeline will take about three years and project costs are estimated at $500 million. The UK office of the US' Fluor Daniel has completed a pre-front-end engineering and design (FEED) study for the scheme.

Gas for the project will be supplied under the EGU scheme.

'EGU has been re-named Al-Khaleej gas and a new company has been set up,' Nasser Jaidah, QP's director of oil & gas ventures, said at the MEED Major New Project Opportunities in Qatar conference in Doha on 14 January. AKGPC will be based in Doha and will be owned by ExxonMobil, QP and Qatari, Kuwaiti and regional investors.

'The Tehran agreement will complement the project to import gas from Qatar. Iranian gas will not be viewed as an alternative,' the KPC official says. Along with Kuwait, Qatar is also pursuing plans to export gas to Bahrain and the UAE. The more advanced is the Dolphin project - the estimated $3,500 million scheme, aimed at supplying at least 2,000 million cf/d of gas (see Oil & Gas).

QP is also progressing with plans to export 500-800 million cf/d of gas to Bahrain. In January 2002, Qatar and Bahrain signed an MoU, which provides for both parties to carry out a joint utilisation study and conclude a heads of agreement. One option is to export gas through the construction of a spur from the proposed Qatar-Kuwait main gas line. The other will be to build a dedicated gas export pipeline (MEED 25:10:02).

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