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.

TotalEnergies has signed a cooperation agreement with the Gulf Kingdom of Bahrain focused on liquefied natural gas, petroleum products and the power sector.

Gulf Marine Services Plc, the Abu Dhabi company listed on the London Stock Exchange and which has offices in the oil and gas and LNG producing nations of the Arabian Gulf for its offshore support vessel fleet, reported solid annual profits and revenues.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, said US bank Morgan Stanley and Co. had become the latest Exchange and Clearing member for ICE’s newest exchange, the ICE Futures Abu Dhabi (IFAD) platform in the United Arab Emirates.

The IFAD membership now stands at a total of 29 firms and banks, listed at the end.

IFAD launched trading at the end of March 2021 in ICE Murban Crude Oil Futures and 18 Murban-related cash settled derivatives and inter-commodity spreads, offering the market a broad range of ways to trade and hedge Murban crude oil.

Contracts traded on IFAD are cleared at ICE Clear Europe where they are cleared alongside ICE’s global energy futures platform covering oil, natural gas and the environmental complex, allowing customers to benefit from critical margin offsets to enhance capital efficiency.

Produced by Abu Dhabi National Oil Co. (ADNOC), Murban is the UAE’s largest crude by volume, with daily production capacity of up to 2 million barrels.

IFAD saw record open interest of 53,515 contracts on May 18, with 48,440 of that total in the ICE Murban Crude Oil futures contract.

A total of 282,692 contracts have traded since the launch, equivalent to 282 million barrels of Murban Crude oil.

This includes 275,507 ICE Murban Crude Oil futures contracts and 7,185 Murban-related cash settled derivatives, with 55 firms having traded on IFAD since the launch.
Average Daily Volume in Murban Crude Oil Futures is 7,210 contracts.

“All the key metrics you look for to judge the traction of a new benchmark in the market - volumes, open interest, number and range of participants, and the depth of the curve - are all increasing,” said Jamal Oulhadj, President of ICE Futures Abu Dhabi.

“This really reflects how the energy industry is utilizing its new ability to hedge forward price risk for Murban crude and contribute to the price formation process of Murban crude oil,” Oulhadj explained.

In addition to producing Murban crude, ADNOC is a growing natural developer, including unconventional gas projects as well as operating the liquefaction and LNG export plant on Das Island.

The pioneering Das Island plant shipped its first cargo in 1977 and produces about 6 million tonnes per annum of LNG as the oldest in the Arab world after Algeria’s Arzew plant.

The plant’s LNG Trains are essential parts of the national resources for storage and export operations and is currently the subject of a rejuvenation programme.
IFAD has 29 Exchange members and 22 Clearing members.

Clearing members stand behind all trades made through IFAD and cleared by ICE Clear Europe, whether it is for the account of a customer, member or their own account.

Murban futures are open for trading for 24 hours a day on Mondays and 22 hours a day Tuesdays to Fridays, with investors from jurisdictions including Abu Dhabi, the US, Singapore, the UK, Switzerland, the Netherlands, France, Norway, Australia, Japan and South Korea, able to trade on IFAD.

The 29 members are: ABN AMRO Clearing Bank; ABN AMRO Clearing Chicago LLC; ADM Investor Services International Ltd; ADM Investor Services; Advantage Futures; BNP Paribas; Banco Santander; Citigroup Global Markets; G.H. Financials Ltd; Goldman Sachs and Co; Goldman Sachs International; HSBC Bank Plc; J.P. Morgan Securities; Marex Financial; Mercuria International; Mizuho Securities USA; Morgan Stanley & Co.; Onyx Commodities Ltd; PVM Oil Futures Ltd; PVM Oil Futures Pte Ltd; Phillip Capital; R.J. O'Brien & Associates; Societe Generale International; StoneX Financial; TP ICAP Markets Ltd; Tower Research Capital Europe; Tullett Prebon (Europe) Ltd; Vercer Capital Markets Trading Ltd; Wedbush Securities.

China Petroleum & Chemical Corp., known as Sinopec, is strengthening its energy presence in the Arab Gulf region by winning a licence to further develop the Mansuriya natural gas field in Iraq, located near the Iranian border, while also arranging Gulf LNG imports.