International oil companies (IOCs) and engineering firms are considering using Kuwait as a logistics hub for a series of giant oil and gas projects in Iraq, according to executives planning schemes in the country.
Baghdad has signed deals with oil majors for the development of 10 of its oil and gas fields since the US-led invasion in 2003.
However, the country lacks a lot of the basic infrastructure and logistics required to transport the heavy equipment and materials needed. Firms working in the country are also likely to want to base non-operational staff outside of Iraq because of the continued difficult security situation.
Iraq is largely landlocked and has only a narrow strip of coast on the Gulf. Logistics are handled at the relatively small and overstretched ports of Basra and Umm Qasr. Both sit on estuaries rather than on the coast, and access for larger vessels to Basra is impossible.
“There is a real question over whether to use Kuwait as a staging post for Kuwait operations,” says one senior engineering executive based in Kuwait. “The IOCs are all looking at locations to base the parts of their Iraq teams that are outside of the country.
“Kuwait is probably the most attractive because of its proximity to Iraq and the ports and logistics it already has.”
Kuwait City is less than two hours’ drive or a 40 minute flight from Basra, according to a senior IOC executive, who is involved in discussions over where to set up a logistics base for its Iraqi operations.
The addition of a new multi-billion dollar port complex at Bubiyan island in the north of Kuwait will make the emirate an even more attractive base.
“Even without Bubiyan, there is enough access there to let work start immediately from Kuwait,” says the senior IOC executive.
Kuwait has been seen as the most likely site for logistics operations since the 2003 invasion. Other locations under consideration include Bahrain and Abu Dhabi.