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Kuwait signs 5-year $3b LNG supply deal with BP KPC expects to import 2.5 mln tonnes of gas annually

KUWAIT CITY, May 13, (Agencies): Kuwait signed a five-year liquefied natural gas (LNG) supply deal with BP on Tuesday, worth an estimated $3 billion, as it seeks to meet rising energy demand to power air conditioning during the scorching Gulf summers. Kuwait, a major OPEC oil producer, on Sunday agreed a $12 billion LNG supply deal over six years with Royal Dutch Shell and will also import gas from fellow Gulf state Qatar. The BP deal, signed by state-run Kuwait Petroleum Corp (KPC), will help Kuwait run its power plants through the hottest time of the year. “The amount contracted by the three companies that we signed with will be up to 2.5 million tonnes per year,” said Nasser al-Mudaf, head of the KPC’s international marketing division. He was referring to the LNG deals with Shell, BP and state-run Qatargas and said this was an annual estimated amount over the next few years.

Frozen
Kuwait began importing LNG, natural gas frozen to a liquid for transport on tankers, in 2009. Over the previous four years it has signed deals with Shell and Swiss-based trader Vitol to supply it during the peak power demand period from April to October. Al-Mudhaf said that British Petroleum, as per the deal, would provide Kuwait with 6-8 annual LNG shipments over five years. With this deal, the KPC marketing sector has managed to secure Kuwait’s needs of LNG till the end of November, Al-Mudhaf said. He, however, admitted that the agreed upon quantities just meet the minimum of Kuwait’s LNG needs. Any additional LNG needs, during the summer, would be secured through spot delivery contracts, he stated. Al-Mudhaf underlined that the contract with BP will save the state treasury’s huge sums of money.

The contract was signed after three years of negotiations and talks, he unveiled, noting that Kuwait owns a four-percent share in British Petroleum. He explained that KPC negotiates and signs contracts with LNG providers, on behalf of the Ministry of Electricity and Water, to secure its needs of natural gas for power generation and other purposes. Ministry of Electricity and Water’s facilities consume 2.5 million tons of LNG on a daily basis, Al-Mudhaf said, adding that this figure is expected to go up to seven million tons per day after five years. Regarding the LNG purchasing contract which KPC signed with Shell on Sunday, Al-Mudhaf the Royal Dutch Shell, as per the deal, would provide Kuwait with 18 LNG shipments a year for six years at competitive prices. He argued that Shell is able to send LNG shipments to Kuwait from many production sites in the region which is a great privilege.

The very close distance between Kuwaiti and Qatari ports make it easy to get supplied with LNG needs quickly, Al-Mudhaf said, clarifying that a LNG tanker moving from Qatar can take 16 to 18 hours to reach Kuwait. There are initial talks with Qatargas to contract on importing four to five million tons of LNG per day as of 2019, he disclosed. On a different issue, Al-Mudhaf revealed that there is an agreement with Egypt to use Sumed pipeline to transport up to two million oil barrels per day to Egyptian and European markets.

He elaborated that about 300,000-500,000 barrels of this amount are sold on the Egyptian market, and the residue is exported to European markets. He announced that great efforts are exerted by KPC currently to enter new markets and to increase its shares on others. In this regard, KPC is working to have a share in oil Australian market after entering the New Zealand market, he said, noting that Kuwait provides New Zealand with 30,000 barrels of crude oil per day. The KPC is also planning to increase its quota on the several other markets including the Indian one, Al-Mudhaf said.






 

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