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.

Long-term contract prices of liquefied natural gas linked to crude oil are set to increase in the weeks ahead as the Organisation of Petroleum Exporting Countries led by Saudi Arabia and other Non-OPEC oil-producing countries opted at a summit in Vienna to extend cuts in oil production through 2024 and with the Saudis making an additional reduction in their own output.

The Norwegian Ministry of Petroleum and Energy has awarded 61 upstream licences in pre-defined areas of the Norwegian Continental Shelf to 30 licensees, including prominent LNG players such as BP, Shell, Total and Eni of Italy, as well as ConocoPhillips, the only bidder among US majors.

“I am pleased to offer 61 new production licenses in this year's round to a diverse range of companies,” said Tina Bru, Norway’s Minister of Petroleum and Energy.

“These companies have shown great interest in gaining access to new exploration acreage, illustrating the industry's confidence in continued profitability from exploration, which is good news for the Norwegian state as the resource owner,” added Bru.

Of the 61 production licences taken up, 34 are in the North Sea, 24 in the Norwegian Sea and there are three in the Barents Sea.

A total of 18 companies have been offered one or more operatorships.

The licences were awarded with work-programme commitments or as additional areas of activity.

“Exploration to provide additional discoveries is vital in order to maintain a high level of activity, employment and revenue over time for Norway's largest industry,” explained the Minister.

“I now eagerly await the commencement of activity and the resulting discoveries,” stated Bru.

The first licensing round on the NCS took place in 1965. The activity started in the North Sea, and exploration in the Norwegian Sea and the Barents Sea started around 15 years later.

Norway is the main pipeline natural gas supplier to Europe, along with Russia’s Gazprom, in competition to LNG deliveries from nations such as Qatar, the US, Nigeria, Algeria and Trinidad and Tobago, as well as Russia.

The Minister noted that since the first oil and gas discoveries, the NCS has contributed more than 15.70 trillion Norwegian crowns ($1.85 trillion) in value creation.

It has also given the Norwegian state a net cash-flow of over 6.70 trillion crowns ($785Bln) since the year 2000.

Norway’s net cash flow from the petroleum sector in 2021 is forecast as amounting to around 99Bln crowns ($11.60Bln), which equates to an income of 75,000 crowns ($8,800) for each Norwegian family of four.

“An active exploration policy, including regular licensing rounds on the NCS will facilitate new discoveries,” said the Ministry.

“This in turn will contribute towards securing state revenue, value creation and employment, all of which is important in order to maintain Norway's welfare over time,” it stated.

The Ministry noted that petroleum activity on the NCS is conducted with great emphasis on health, safety and the environmental standards.

“Exploration, development and production takes place with low emissions to air. The greenhouse gas-emissions are also part of the European Union Emissions Trading System (ETS),” it added.

The Ministry said that the probability of an oil-well blow-out is extremely low, and there are strict requirements in place for emergency preparedness to reduce the consequences in the event of an accidental oil spill.

“During 50 years of petroleum activities, no accidental oil spills have reached Norwegian shores, and no damage to the marine environment has been proven,” it said.

The big winners in the licensing round include German oil and gas company Wintershall Dea, which was awarded interests in 16 Norwegian blocks, including four as operator.

Italy’s Eni said the jointly-owned venture company Var Energi, in which the Milan-based company has a 70 percent stake and the balance is held by European energy investment firm HitecVision, was awarded 10 exploration licences.

Licence stakes awarded/and with operatorships: Aker BP (10/8); AS Norske Shell (1/1); Chrysaor (6/3); Concedo (1/0); ConocoPhillips (4/3); DNO (10/4); Edison (2/0); Equinor (17/10); INEOS (4/1); Inpex (2/1); Kufpec (1/0); Lime (4/0); Lotos (3/0); Lundin (19/7); MOL (1/1); M Vest (2/0); Neptune (6/3); OKEA (6/4).

OMV (3/3), One Dyas (6/0), Pandion (5/0); Petrolia NOCO (3/1); PGNiG (4/0); Source (4/0); Spirit (3/0); Sval (5/1); Total (3/0); Var Energi – Eni (10/5); Wellesley (2/1) and Wintershall DEA (16/4).