Qatar-Kuwait sign gas pipeline agreement

01 February 2002

The governments of Qatar and Kuwait signed on 30 January the protocol for a gas sale and purchase (SPA) agreement for the proposed gas pipeline from Ras Laffan to Kuwait. A second agreement was signed on the same day by Kuwait Petroleum Corporation, Qatar Petroleum (QP) and ExxonMobil Gas Marketing, part of the US' ExxonMobil Corporation, covering the project's term sheet (MEED 20:5:00).

'The signing of the protocol and the term sheet paves the way to finalise an SPA. Gas is needed to meet the rising demand for power and other future energy projects in Kuwait,' Kuwait's Oil Minister Adel Khaled al-Sabeeh said after the signing of the agreements with his Qatari counterpart Abdullah bin Hamad al-Attiya.

The term sheet will form the basis for an SPA to be concluded by the summer.

At present, Kuwait's Ministry of Electricity & Water utilises about 85,000 barrels a day of heavy oil and about 270 million cubic feet a day (cf/d) of natural gas as feedstock for power generation. 'Qatari gas will be used to fuel the 9,000-MW power generation capacity of Kuwait,' Al-Sabeeh said.

The proposed pipeline will transport 800 million-1,400 million cf/d of natural gas from Ras Laffan to Al-Zour in southern Kuwait. The agreement will be for 25 years, with first deliveries planned in the last quarter of 2005.

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 (MEED 23:3:01).

Gas for the project will be supplied under the enhanced gas utilisation (EGU) scheme being developed by ExxonMobil and QP at the North Field.

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