Shell’s Kuwait gas deal worth $800m

14 April 2010

Shell is the first oil major to sign enhanced services deal in Kuwait

Kuwait Oil Company (KOC) and UK/Dutch Shell Group’s enhanced technical service agreement (ETSA) covering the development of Kuwait’s northern gas fields is worth KD229.3m ($797m), according to details released by the state-owned oil company. 

KOC has been in discussions with IOCs for the past four years, but until now had failed to reach an agreement. Shell became the first international oil company (IOC) to sign an enhanced services deal in Kuwait, with the European energy major signing at KOCs offices on 17 February.

Under the five-year deal, Shell will help KOC develop and manage its northern Jurassic gas fields, producing an undisclosed volume of non-associated gas. The project is technically complex with the gas fields deep, tight and sour, sulphur-rich.

Technical services agreements between KOC’s parent company, the Kuwait Petroleum Corporation (KPC), and international energy majors, including the UK’s BP, Shell and France’s Total, all expired between August 2008 and July 2009. The deals face considerable political opposition in the country, and senior IOC sources have previously told MEED they hold little hope of seeing them concluded. The Oil Ministry, KOC and KPC hold conflicting views on the role of IOCs, which could stall progress on the deal with Shell (MEED 3:9:09).

Kuwait’s natural gas reserves stand at nearly 63 trillion cubic feet, the majority of which is associated with crude oil. In 2008, the country produced 12.8 billion cubic metres of gas.

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