|Finally, the Kuwait Oil Company (KOC) has signed enhanced technical service agreements (ETSA) with two major international oil companies in private without any form of media publicity. The official approval was given last March but KOC opted to delay as much as possible in order to avoid local publicity. However, this move was not appreciated by the two major companies as they were eager to announce such vital decisions to their shareholders.|
Today, all parties involved are winners as long as they meet their targets on time. Kuwait has been waiting for a long time to achieve such objectives for increasing its daily crude oil production to 3 million barrels by 2010 and hopefully to 4 million barrels by 2020. Now the road is clear and the achievement of these objectives is entirely in the hands of the two winners of the ETSA and their performance. Nothing seems to be in their way.
Shell has the biggest part of the contracts, as it has to increase the production in northern oil fields to more than 1 million barrels per day. On the other hand, BP is tasked with maintaining the Great Burgan oil field, which is one of the three biggest oil producing fields in the world, and ensuring its production is more than 1.7 million barrels per day. Our Burgan field is old and needs to be maintained and taken care of. It is a hard challenge but it is required as this oil field needs care because Kuwait depends on more than 70 percent of its throughput. There was a time when the Burgan oil field produced more than 2 million barrels per day.
Shell has also been assigned the task of taking care of the water flow from the oil fields, which KOC has been struggling to manage without the help and assistance of overseas companies. Shell has to manage the water that comes along with the oil and control it to ensure smooth stream of oil flow.
The three agreements that KOC has signed are of great significance and will realize the achievements that Kuwait needed for a long time in order to increase its production capacity to above 3 million barrels per day. KOC must now make sure that the two companies can meet the agreed targets. Of course, there are some concerns that the American majors did not participate in the process particularly Chevron.
Bad publicity, bad judgments and any misinformation can lead to investigations and parliamentary hearings followed by further investigations such that no company will be ready to stomach such accusations and it will eventually lead to the involvement of the head office. This could be the main reason why many international oil companies participate in the upstream business in Kuwait.
One reminder – oil companies must succeed this time. KOC has to make sure it has done its homework thoroughly and will be able to defend its decision of inviting international oil companies back to Kuwait. It must be a win-win situation for both parties.
By Kamel Al-Harami
Independent Oil Analyst