Higher oil production has provided ample gas to meet demand this year
Kuwait is not expected to import any more liquefied natural gas (LNG) this year, as higher oil production looks set to provide ample associated gas to meet demand.
The majority of Kuwait’s domestic natural gas is associated with oil production, which has been ramped up this year as a result of high oil prices that have averaged more than $100 a barrel for much of the year.
The country’s crude oil production is currently estimated to be between 2.6-2.7 million barrels a day (b/d). In 2010, with oil production at 2.2-2.3 million b/d, Kuwait produced some 1 billion cubic feet a day (cf/d) of associated gas, along with 150-200 million cf/d from non-associated fields.
It consumed an average of 1.45 billion cf/d, with the shortfall covered by imports of around 270 million cf/d of LNG, largely from regional neighbours, Yemen and Oman. According to UK oil major BP, Kuwait imported a total of 2.78 billion cubic metres of gas in 2010, approximately 2 million tonnes of LNG from various sources.
“At this level they will certainly not need to import for the rest of the year, and if they maintain production at this level, they won’t need it next year either,” says Kamil al-Harami, an independent oil analyst based in Kuwait City.
Kuwait became the first Gulf country to begin LNG imports, unloading its first LNG cargo in August 2009 at the Mina al-Ahmadi Gas Port terminal, a permanently moored regasification vessel supplied by the US’ Excelerate Energy. This was the start of a string of cargoes imported to meet the country’s peak summer electricity demand, as the country’s residents turn up their air conditioners.
State-owned Kuwait Petroleum Corporation (KPC) signed a four-year LNG supply contract in April 2010 with UK-Dutch oil major, Shell and Swiss energy trader Vitol. The two firms would provide LNG for Kuwait’s peak summer season from April to October until 2013.
In March, KPC extended its seasonal LNG imports from mid-March until end of November.
“The extension came as a result of increasing demand for eco-friendly and clean energy source,” state-owned Kuwait news agency quoted Abdullatif al-Houti, KPC’s managing director of international marketing, as saying.
“Upon a request from the Ministry of Electricity and Water, the extension came early this year, compared to last year’s April to October.”
With higher crude production resulting in more associated gas, the measure now looks unnecessary. But increased oil production is only a short term fix to Kuwait’s gas shortfalls while it develops unassociated fields in the north of the country. However, progress on the Jurassic gas schemes has been slow. A feasibility study is currently under way for larger permanent LNG facilities to replace the 500 million cf/d Mina al-Ahmadi regasification terminal, which is expected to be completed by the end of the year (MEED 26:8:11).
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