LNG

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.

QatarEnergy said that as part of its LNG expansion project it awarded the engineering, procurement, construction and installation (EPCI) contract for the offshore portion of its North Field feed-gas project to Houston, Texas-based firm McDermott Inc.

The expansion project will increase the state of Qatar’s LNG production capacity from 77 million tonnes per annum to 126 MTPA, through the North Field East (NFE) and North Field South (NFS) development ventures with first LNG expected in 2025.

QatarEnergy explained that the scope for the contract includes 13 normally unmanned wellhead platforms topsides (eight for NFE and five for NFS), in addition to various connecting pipelines and the shore approaches for the NFE pipelines, beach valve stations and buildings.

The Qataris added that the jackets and the pipelines for the NFS Project will be subject to a separate tender which is expected to be awarded in the first half of 2022.

“The award of this major EPCI contract is a momentous milestone that demonstrates QatarEnergy’s commitment to delivering our LNG expansion projects on time and to ensure the significant additional global LNG demand is catered for in a timely manner,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and the President and chief Executive of QatarEnergy.

“This contract also reinforces our excellent relationship with McDermott,” added Al-Kaabi.

“We are confident that the effective collaboration between QatarEnergy, Qatargas and McDermott will result in the safe and successful delivery of the project according to plan,” stated the CEO.

Al-Kaabi added that the QatarEnergy affiliate Qatargas, which has a proven history of delivering such major projects, has been entrusted with executing this mega project on behalf of QatarEnergy.​

“I would like to take this opportunity to express my thanks and appreciation to Sheikh Khalid bin Khalifa Al-Thani, the CEO of Qatargas, and to both the Qatargas and QatarEnergy teams for their significant efforts and contributions that resulted in the successful and timely execution of this contract,” Al-Kaabi declared.

The scope of the first phase of the expansion at the Ras Laffan production complex involves an additional four Trains, each with 8.0 MTPA of output.

Qatar has the southern portion of the North Field in Gulf waters and the other part is under the jurisdiction of neighbouring Iran.

The Kingdom of Jordan has started a tender process for the upgrading of the liquefied natural gas import terminal facilities at the Port of Aqaba amid economic expansion plans  for the region including in tourism and trade.

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.

Qatar Petroleum has signed a 10-year Sale and Purchase Agreement with Royal Dutch Shell for the supply of 1 million tonnes per annum of liquefied natural gas to China.

The shipments will commence in January 2022 to various Chinese regasification terminals.

“We are pleased to enter into this new LNG SPA with our trusted partner Shell,” said Saad Sherida Al-Kaabi, Qatar’s Minister of State for Energy Affairs and the President and Chief Executive of Qatar Petroleum.

“I am especially delighted that this agreement will meet part of the demand of Shell's end customers in China, thereby further supplementing Qatar's contribution to meeting China's growing energy needs,” added Al-Kaabi.

The Qataris believe that the SPA with Shell to supply China further highlighted their ability to meet the requirements of customers and partners across the world.

“I would like to take this opportunity to thank the management and staff of Shell for the successful conclusion of this SPA, which is another testament to our long and fruitful partnership,” stated Al-Kaabi.

The Qatari Minister also thanked Sheikh Khalid Khalifa Al Thani, the CEO of Qatargas, and his team for their valuable contributions to reinforce Qatar's position in the LNG market.

Qatar plans to supply the LNG volumes contracted under this agreement from its Qatargas I venture, which will become 100 percent owned by Qatar Petroleum as of January 2022.

The Qatargas I joint venture, also comprising ExxonMobil, France’s TotalEnergies and Japanese firms Marubeni Corp. Mitsui & Co. will have been on stream for 25 years in 2022.

“China is considered a major customer for the State of Qatar and a strategic partner in the energy sector,” said the statement.

“With the conclusion of this agreement, China will be supplied with approximately 12 MPTA of LNG under long-term SPAs from Qatar,” it added.

Qatar Petroleum is in the midst preparations for LNG expansion and its various projects, including the North Field South venture, will cost around $35 billion spread over the next five years, though the Qataris will have several equity partners from the energy majors and whose names have yet to be disclosed.

The expansion of output at the Ras Laffan LNG plant will comprise the construction of four Trains for liquefaction to take the Arab Gulf state’s output from 77 million tonnes per annum up to 110 MTPA.

Qatar is additionally considering boosting capacity beyond the 126 MTPA with a future second expansion already announced.

Qatargas Operating Company has awarded Italian energy and LNG engineering company Saipem additional work worth $350 million within the North Field Production offshore project in the Arab Gulf underpinning the Qatar LNG expansion.

Global liquefied natural gas export plants marginally increased their cargo liftings as North Asia spot prices dropped along with those in Europe, while other energy markets were underpinned by higher crude oil prices on prospects more nations will be fully relaunching their economies.

Cargo liftings fell slightly at export plants worldwide, though North Asia prices were still substantially higher than those in Europe and US Gulf Coast futures held up amid adequate future demand forecasts.

Global liquefied natural gas plants lifted the pace of cargo loadings in the week even as previously very high winter season prices for physical North Asia spot cargoes moderated and the February futures contract expired.