Kuwait, Saudi boost Neutral Zone output ‘Any increase is welcome’

KUWAIT CITY, April 27, (RTRS): Saudi Arabia and Kuwait have boosted output capacity from their shared Neutral Zone to 610,000 barrels per day from around 550,000 bpd, a Kuwait oil official said on Tuesday.
But the two OPEC producers have drawn back from long-term plans plans to further boost capacity to 700,000 to 900,000 barrels per day (bpd) by 2030.
A project undertaken by oil major Chevron to increase the percentage of oil recovered from the fields would aim to maintain onshore output, Bader al-Khashti, the managing director of the Kuwait Gulf Oil Company told Reuters. KGOC operates the Kuwait side of the zone.
“Bearing in mind that this is a declining field, our target now is sustainability,” Khashti said on the sidelines of an energy event. “Any increase is welcome, and that will depend on recovery factors at the project. But we don’t have a practical target (to increase capacity).”
The two completed a development plan to boost offshore capacity at the offshore Khafji oilfield in the zone to 350,000 bpd last month, from 300,000 bpd, he said.
Output at Khafji was steadily rising, and had reached 310,000 bpd, he said. That was up from 272,000 bpd the field was reported as producing in February.
“We completed the field development project phased one, which debottlenecked facilities there,” he said. “Since March, the capacity at the Khafji side has been 350,000 bpd.”
Kuwait and Saudi Arabia were discussing removing the zone from inclusion in OPEC output curbs, transferring reductions there to other fields outside the zone, he said.
“We want to leave it open rather than apply quotas, because it’s a joint operation so I think maximum production is better for both.”
Saudi and Kuwait plan to spend $11 billion on the zone over the next ten years on developing the enhanced oil recovery project with Chevron and maintaining capacity, he said.
Khashti declined to say which companies would win a tender for a $300 million contract for drilling at Khafji. Bidding for the project closed on March 15.
Chevron is completing a pilot project to inject steam into the onshore Wafra oilfield to boost output of heavy oil there. Heavier crude is more difficult to extract from oil-holding rock.
Chevron began steam injection in June 2009. If successful, the technique could boost the recovery rate of heavy oil held in the field to 40 percent from 5 percent throughout the zone.
The Neutral Zone is a region between Kuwait and Saudi Arabia that dates back to 1920s treaties to establish regional borders.
Chevron holds a concession to operate the Saudi side of the zone.
Delving further into the energy issue from an international perspective, Sheikh Ahmad said the world nations would continue to depend heavily on the fossil fuel at a rate of 80 percent of the globe’s needs of energy, thus the high need for wider investments in the energy sector would persist.
Oil prices, that drastically fluctuated in 2008 and 2009, remained at a reasonable level in 2010, ranging between USD 75 and 80 pb. “This price level is in favor of ventures and is ecnouraging for more investments,” he said.
Global oil demand has climbed to five million bpd, where the consumption of the crude in Asia has reached 30 percent of the overall demand in the whole world, the minister of oil added.
Also:
KUWAIT: Production at Iraq’s West Qurna phase two oilfield will hit 120,000 barrels per day (bpd) in 2012, a senior executive from Norway’s Statoil said on Tuesday.
Statoil along with its consortium partner Russian energy company Lukoil have already started issuing tenders for work at the field, said Kjetil Tonstad, vice-president for International Exploration and Production, Middle East.
Development work at Iraq oilfields were moving ahead swiftly and the political situation has had no impact, he said.
“Execution is going full speed ahead despite the political situation, there is no delay caused by the political situation so far,” he said.
Lukoil and Statoil sealed the 20-year deal to develop the West Qurna Phase Two, a 12.9 billion barrel oilfield in the south, in an auction in December.

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