LNG

Kuwait, the Arabian Gulf state and LNG importer that was hit by power cuts in June as soaring temperatures pushed the electricity grid to its limits during peak operations, has made a huge oil and gas discovery in the Gulf to boost energy security.

Kuwait Oil Company (KOC) said on July 14 that had had made a “giant” oil discovery in the Al-Nokhatha field east of the Kuwaiti island of Failaka.

The discovery has estimated resources of 5.1 trillion standard cubic feet of natural gas and 2.1 billion barrels of light oil.

KOC said in a statement carried by the official Kuwait News Agency that the initial estimated area of the discovered well is around 96 square kilometres and estimated reserves were equivalent to the country's entire production over a period of three years.

LNG importer

Kuwait has been an LNG importer since 2009 to meet its increasing natural gas requirements for domestic demand and refinery operations.

The Gulf state previously used a floating storage and regasification unit (FSRU) at the port of Mina Al-Ahmadi, though since 2021 has an onshore LNG import terminal at Al-Zour with eight storage tanks and 1.8 million cubic metres of storage.

Kuwait stated that the initial findings on the oil and gas discovery “indicate huge potential to further enhance and increase hydrocarbon resource quantities in various layers and reservoirs” within the discovered field.

KOC stated that the marine area, representing about one-third of Kuwait's total land area and covering more than 6,000 square kilometres, in the first phase included drilling six exploratory wells for oil and gas. It added that subsequent stages would be determined based on the drilling results.

“The offshore exploration (Al-Nokhatha field) project is now a national endeavour with the goal of enhancing Kuwait's hydrocarbon reserves sustainability and meeting global demand to elevate Kuwait's status as a reliable global oil and gas producer,” KOC explained.

Seismic surveys

KOC added that the launch of the current marine exploration project was based on two-dimensional seismic surveys of the area, along with geophysical and geological studies.

“Additionally, the project will contribute to developing new technical skills in drilling and offshore production, creating varied employment opportunities for national talents,” it pointed out.

“Based on initial test results, a developmental plan will be established to commence actual production from the field at the earliest opportunity,” KOC stated.

KOC added that this discovery was the result of cohesive collaboration across its energy sector and the continuous support received from the state-owned principal  enery company and management of Kuwait Petroleum Corporation (KPC).

Kuwait’s Al-Zour LNG terminal is owned by KPC and has recently become a focus of the country’s domestic natural gas requirements.

Al-Zour has the capacity to import 22 million tonnes per annum of LNG for industrial and domestic use, though most recent annual imports have amounted to just over 6 million tonnes of LNG.

The onshore Al-Zour terminal, the largest in the Middle East, was constructed to provide fuel and power to Kuwait’s refining and petrochemicals industries located in and around Al-Zour.

Saudi Arabia and Kuwait have been pushing their claim in recent days to the offshore Durra natural gas field in the Arabian Gulf that is also being claimed by Iran and the Iranians have threatened to move in now and start drilling.

LNG importer Kuwait has made its first natural gas discovery as an operator offshore during a drilling campaign in the waters of LNG exporting nation Indonesia.

Kuwait Foreign Petroleum Exploration Company (KUFPEC) announced the successful commercial discovery of gas in Indonesia's Anambas Block.

KUFPEC (Indonesia) made the discovery through the successful drilling of the Anambas-2X well.

Acting Chief Executive of KUFPEC, Sheikh Nawaf Saud Al-Sabah, stated that this “exciting discovery” marked the first operated offshore exploration discovery for KUFPEC.

“It demonstrates KUFPEC’s growth and potential as an operator of offshore oil and gas projects,” added Al-Sabah.

“I am especially proud of the professionalism of the KUFPEC team, which included Kuwaiti experts who led operations on the drilling platform,” stated the Acting CEO.

The company said the well was drilled in 288 feet of water using a jack-up rig to reach a total depth of 10,509 feet.

Natuna Sea gas

Located in the Natuna Sea near an existing block in which KUFPEC is a partner, the Anambas Block was awarded to KUFPEC through a competitive bidding process in 2019.

As part of the drilling campaign, KUFPEC conducted two drill stem tests, one in the Lower Gabus formation and the other in the Intra Keras formation.

The company said its tests subsequently resulted in a stabilized combined flow rate of 7 million standard cubic feet per day of natural gas and 1,240 standard barrels per day of condensate from the two formations.

KUFPEC said it intended to conduct more tests on other formations within the same well.

The Block is fully operated by KUFPEC, which also holds the entire 100 percent participating interest. KUFPEC’s production sharing contract has a licence term of 30 years, including a six-year exploration period.

KUFPEC is the international upstream company engaged in exploration, development and production of crude oil and natural gas outside the State of Kuwait and is a wholly owned subsidiary of Kuwait Petroleum Corp.

Al-Zour LNG

Kuwait in 2021 completed its first onshore LNG import terminal, the Al-Zour facility located about 90 kilometres southeast of Kuwait City and about 16km from Kuwait’s border with Saudi Arabia.

It consists of a regasification facility capable of liquefying 130,000 cubic metres of gas per day and eight LNG storage tanks, with four in the first phase, and each with 225,000 cubic metres of capacity.

Al-Zour is the largest LNG import terminal in the Middle East and was constructed to provide fuel and power to the refining and petrochemicals industries.

Until recently, Kuwait had only imported LNG via a floating storage and regasification unit (FSRU) at the dockside of Kuwait’s Mina Al-Ahmadi port. The FSRU has been in operation since 2009.

Oil exporter Kuwait is also focusing on ramping up its own natural gas production as part of its economic growth strategy through to 2040.

The use of LNG in the Middle East is forecast to expand by around 50 percent through 2025, with much of the increase coming from Kuwaiti demand.

Kuwait Integrated Petroleum Industries Co. (KIPIC) said all construction has formally been completed at the onshore LNG import terminal at Al-Zour, the largest in the Middle East, and constructed to provide fuel and power to the refining and petrochemicals industries.

A South Korean consortium comprising Hyundai Engineering Co., Hyundai Engineering & Construction Co. and Korea Gas Corp, also confirmed that the project had been executed.

The Hyundai-led consortium won the construction project valued at $2.9 billion back in 2016 from KIPIC, an affiliate of state-run Kuwait Petroleum Corp.

While the terminal was developed by KIPIC, it is owned by national oil and gas company KPC.

The Kuwait terminal is located about 90 kilometres southeast of Kuwait City and about 16km from Kuwait’s border with Saudi Arabia.

It consists of a regasification facility capable of liquefying 130,000 cubic metres of gas per day and eight LNG storage tanks, with four in the first phase, and each with 225,000 cubic metres of capacity.

A statement noted that Hyundai Engineering was in charge of the overall management of the project including design, licensing and the construction of core facilities.

Hyundai E&C was responsible for the building of the LNG storage tanks and reclamation of 7 million cubic metres of land from the sea.

Kogas, the owner of four LNG import terminals in South Korea, conducted test runs through July 2021 when the first commissioning cargo was delivered and since then has run operational training.

World-class facility

The Korean consortium said they shortened the construction period by more than six months even under the restrictions of the Covid-19 pandemic.

“Through the successful completion of this project, we have proved our world-class LNG plant construction and technological capabilities,” said a Hyundai Engineering statement.

Hyundai Engineering added that the LNG facility would provide the Middle East country with a stable gas network to respond to the rising call for energy diversification.

Kuwait already has a 15-year contract with QatarEnergy to buy 3 million tonnes per annum of LNG for the Al Zour facility.

Energy company KPC additionally plans to buy another 3.5 MTPA from the open market or through short-time contracts.

Until recently, Kuwait has imported LNG via a floating storage and regasification unit (FSRU) at the dockside of Kuwait’s Mina Al-Ahmadi port. The FSRU has been in operation since 2009.

Oil exporter Kuwait is also focussing on ramping up its own natural gas production as part of its economic growth strategy through to 2040.

The use of LNG in the Middle East is forecast to expand by around 50 percent through 2025, with most of the increase coming from Kuwaiti demand.

Kuwait’s domestic natural gas requirements are increasing in line with other Middle East nations and it is already receiving additional deliveries from suppliers such as the US exporters on the Gulf Coast of Louisiana and Texas.

The expansion in infrastructure comes as Kuwait and its neighbour, the United Arab Emirates, are listed 20th and 29th respectively in the list of 42 destinations for shipments from US exporters.

The Gulf Arab economies are among the world’s biggest oil consumers on a per capita basis, in part because of the heavy use of crude in their electricity grids.

Analysts note that the state of Kuwait, like the other Gulf Cooperation Council members, is embarking on an ambitious path of economic growth fuelled by more domestic natural gas use and less oil utilization.

Several of Kuwait’s neighbours are also trying to phase out oil from their power markets, including the UAE and Saudi Arabia. They are also turning to renewable projects and hydrogen development.

At the same time they must focus on building up their petrochemical and oil exports industries to monetize their resource heritage for the good of their citizens.

Kuwait Integrated Petroleum Industries Co. (KIPIC) has unloaded its first liquefied natural gas shipment at the Arab state’s onshore Al-Zour import terminal, the largest in the Middle East, and constructed to provide fuel and power to the refining and petrochemicals industries.

Greece’s Hellenic Gas Transmission System Operator (DESFA), whose main shareholders are the gas utilities of Spain and Italy, said it was awarded the contract for operating and maintaining the new onshore liquefied natural gas import terminal under construction in Kuwait and set to start up in 2021.

Italian natural gas network operator Snam, one of Europe’s leading energy infrastructure companies, said it expected Kuwait Petroleum Corp., the Arab Gulf oil and gas company, to select a winner soon to run a liquefied natural gas import facility for which Italy’s grid operator has made a bid through a subsidiary.

Qatar has signed a new long-term sale and purchase agreement with Royal Dutch Shell to deliver 1 million tonnes per annum of liquefied natural gas to the neighbouring Gulf state of  Kuwait starting in 2020.

This accord between Qatargas and Shell for the supply of LNG to Kuwait follows the recent pact signed between Qatar Petroleum and Kuwait Petroleum Corp. 

Cargoes of LNG are shipped at present to the dockside facility at Mina Al-Ahmadi in Kuwait. This terminal has been in operation since 2009.

However, the Gulf nation is building a second and larger onshore terminal close to a new refinery complex at Al-Zour, about 90 kilometres south of Kuwait City.

The new Kuwaiti terminal is being constructed  by a consortium led by Hyundai Engineering Co. of South Korea.

“These agreements demonstrate our commitment to Kuwait, which is a very important LNG market,” said the Qatari Minister of State for Energy Affairs, Saad bin Sherida al-Kaabi, who is also President and Chief Executive of Qatar Petroleum.

He added that the new SPA further underlined Qatargas’s position as the a market leader in LNG and demonstrated the company’s track-record of providing reliable LNG to the global market place.

The supplies will come from the Qatargas IV Train at Ras Laffan. This is a joint venture owned 70 percent by Qatar Petroleum and 30 percent by Shell.

Kuwait’s domestic natural gas demand is increasing in line with other Middle East nations and it is already receiving additional deliveries from new suppliers such as the US.

The expansion in infrastructure comes as Kuwait and its neighbour, the United Arab Emirates, are already among the top 20 destinations for shipments from US exporters such as Cheniere’s Energy’s Sabine Pass export plant in Louisiana.

The state of Kuwait, like the other Gulf Cooperation Council members is embarking on an ambitious path of economic growth.

This requires cleaner energy sources such as natural gas that will contribute to reducing emissions and improving local air quality, while also supplying energy for industry and domestic consumption.

The Kuwaiti authorities have agreed a proposal for pipeline infrastructure to be connected to the onshore LNG import terminal planned for the port of Al-Zour, adding to volumes shipped to the existing floating import facility at Mina Al-Ahmadi.