French oil major Total has signed a technical services agreement worth KD7.8m ($27.6m) with Kuwait Oil Company (KOC) to help develop its heavy crude oil deposits in the north of the country.
The company signed the deal on 5 October after holding talks with KOC since April. The state-owned upstream operator had been in talks with three major international oil companies (IOCs) including Total, the US’ ExxonMobil and UK/Dutch Shell Group to develop the northern Adbali, Ratqa, Raubhatain and Sabriyah fields.
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. KOC has been in discussions with IOCs for the past four years, but until now had failed to reach an agreement.
Kuwait needs IOC expertise to help develop its heavy oil resources since it lacks any experience in the field, say analysts in the country. However, under Kuwait’s constitution it is illegal for foreign companies to own any of its natural resources, traditional production sharing agreements usually employed by IOCs are impossible to use. This leaves technical service agreements are the only way forward.
Shell became the first IOC to agree an enhanced technical services agreement (ETSA) in the country in April this year, signing a $800m deal to help it develop Jurassic gas fields in the north of the country. The company had already been advising KOC on its planned early production facilities in the north (MEED 13:04:10).
Kuwait has an estimated 13 billion barrels of heavy crude oil reserves, located primarily in the north of the country. It plans to boost its crude oil production to 4 million barrels a day (b/d) by 2020 from 2.3 million b/d currently.
Developing heavy oil will form the bulk of the increase, although the plans have been cut back to 270,000 b/d from the original figures of 900,000 barrels a day (b/d) of heavy crude by 2020.