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Ops halt cost Kuwait $25bn

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Khafji, Wafra in hiatus for 5-6 years

KUWAIT CITY, Dec 27: The total accumulated financial losses, as a result of halting production operations in the joint operations areas in Khafji and Wafra, in 2014 and 2015 until the resumption of production in 2020, amounted to $ 25.474 billion, reports Al-Rai daily quoting reliable sources. They explained that the non-production losses during the pause period amounted to $ 21.585 billion, including $ 13.21 billion in Khafji joint operations area, and $ 8.375 billion in Wafra joint operations area. The total losses of operating expenses amounted to $ 3.888 billion, including $ 1.649 billion in the Wafra joint operations area.

The cost for maintaining wells and facilities in Wafra and Khafji areas until the date of production resumption amounted to about $85.65 million, of which $33.34 million were in Wafra joint operations area. The average cost of producing a barrel of crude oil rose during the 2020/2021 fiscal year to KD 12,201 compared to the previous years before the production was stopped in the two joint operations areas, due to low production rates. The average cost of production per barrel rose last year by 235 percent compared to 2012, 182 percent compared to 2013, and 116 percent compared to 2014.

Attributed
The sources attributed the decline in production rates in the joint operations area in 2020 to the effects of COVID- 19 crisis. They said the actual production in Wafra joint operations area represents part of the production of light oil only due to the shortage of manpower and maintenance platforms. The sources affirmed the start of light oil production in mid-2020 and then gradual increase in production by operating more wells according to the agreed plan by the partners. They explained that the significant decrease in the average daily actual production during the 2020/2021 fiscal year compared to the average production in the previous years to stop production in the two joint operations areas at rates that reached 72 percent in Khafji and 79.9 percent in Wafra was due to the non-completion of the projects related to gas exploitation by the two partners.

This led to the region’s inability to increase the current production levels, as the increase in production causes the burning of larger quantities of gas in contravention of the standards and requirements of the Public Authority for Meteorology and Environmental Protection on the other side (Khafji) regarding air quality. Regarding the decrease in the average daily production in the joint Wafra area, the sources attributed this to the COVID-19 crisis, and the two partners’ lack of agreement on the production rates in the region, despite the company’s ability to increase production, but it wasn’t possible because of the lack of agreement with the partner on production quantities, in addition to the failure to operate heavy “Eocene” oil wells until December 21, 2020 due to lack of manpower and maintenance platforms.

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