Kuwaiti MPs slam oil shipments to Iraq


The lawmakers also strongly criticized what they called bad treatment of Kuwaiti tanker drivers by Iraqi authorities and praised a decision by former oil minister Sheikh Ali Al-Jarrah Al-Sabah to suspend the shipments in protest against the ill-treatment. The calls came during the debate on the 2007/2008 budget of Kuwait Petroleum Corporation (KPC).

Minister of Electricity and Water and acting Oil Minister Mohammad Al-Olaim meanwhile promised to launch a probe into the allegations made during the interpellation of Sheikh Ali last week, especially with regards to a number of moral violations committed by top KPC officials. Responding to calls by MPs to investigate those violations, Olaim said that the probe will be transparent and that if the officials are proven guilty, proper action will be taken against them.

During the grilling last Monday, MP Musallam Al-Barrak displayed pictures of senior KPC officials at a late-night party with Japanese prostitutes during an official assignment. Olaim also stressed that the multi-billion-dollar investment in the northern oilfields remained a top priority for the government and that the project will be submitted to the Assembly very soon. The project, aiming to raise output in four oilfields in north Kuwait from 550,000 barrels per day to about 900,000 barrels per day with the help of foreign oil companies, has been repeatedly delayed by MPs.

Still MPs expressed fears that foreign companies will use the project to return to the pre-nationalization era. Kuwait nationalized it oil industry in early 1970s and since then all foreign company operations in Kuwait have been on the basis of technical service agreements and not participation. MPs called for implementing the project on the basis of contracts and not production-sharing as the project initially proposed.

The lawmakers also called for increasing the number of Kuwaiti employees in the oil sector, which generates 95 percent of public revenues, saying that it should employ half of Kuwaiti people. The KPC budget estimates revenues of KD 10,366 million, expenditures of KD 9,266 million and profits of KD 1,099 million. MPs could not vote on the budget for lack of quorum. Voting is expected to take place today when the Assembly resumes debating other budgets.

Meanwhile, KPC said a treaty with Saudi Arabia over a disputed gas field should be implemented quickly as the state struggles to meet demand for gas. The offshore Dorra field has been a bone of contention between Tehran and Kuwait since the 1960s. It lies on the continental shelf between OPEC producers Kuwait, Saudi Arabia and Iran. Tehran has in the past objected to reports that Kuwait and Saudi Arabia were discussing joint development of Dorra.

KPC officials recommended in a presentation, a copy of which was obtained by Reuters yesterday, that "the implementation of treaties with Saudi Arabia should be expedited to accelerate the development of the Durra field". The recommendation was one of several KPC made to help meet rising demand for gas to be used in power generation as an economic boom sparked by record oil revenues strains capacity. KPC also recommended that development of gas fields not associated with crude in northern Kuwait be undertaken as quickly as possible.

To reach this goal, KPC’s exploration and production arm Kuwait Oil Company should be allowed to have direct dealings with international contractors to help expedite the project, KPC said in the document. It called for construction of a gas and fuel grid in the small desert country. KPC, which oversees the country’s energy sector, said the state should ensure that a planned 615,000 barrels per day (bpd) Al-Zour refinery would start production on time in December 2011 "to avoid having to rely on crude oil as fuel (for power stations) for environmental and economic considerations". It said the refinery would produce 225,000 bpd of low-sulphur heavy fuel oil, or the equivalent of 1,323 billion btu daily. Other recommendations to ease the gas supply shortage included imports of LNG, gas imports via pipeline and producing synthetic gas from heavy oil.

More than 20 companies plan to submit bids for the Al-Zour oil refinery with a German-Italian alliance expected to make the best offer, a local newspaper said yesterday. In May, Kuwait doubled the planned budget to $ 12 billion for the plant, which would be the largest in the Middle East. Rapidly rising costs in the energy industry have delayed the project and threatened its viability.

The state issued a new tender for the project in June. It cancelled the first tender in February after bids came in far above its initial budget. Bids reached as much as $ 15 billion, according to local media reports. Kuwaiti daily Al-Rai said in an unsourced report state-refiner Kuwait National Petroleum Company (KPNC) expected to receive more bids than at the last tender when 20 foreign firms were declared qualified for the tender.

An unidentified German-Italian alliance was expected to make the best offer to win one of the tenders, the paper said. Prequalification bids for the five engineering, procurement and construction packages have to be submitted by July 3. At 615,000 bpd, Al-Zour would exceed the capacity of the Middle East’s largest refinery, Saudi Arabia’s 550,000 bpd Ras Tanura plant. Saudi Arabia plans to build another 400,000 bpd refinery in Ras Tanura.

Separately, Kuwait may reach its goal to boost oil output capacity to four million barrels per day early after some new discoveries but the target date remains 2020, the head of state firm Kuwait Oil Company (KOC) said yesterday. Existing oil production capacity in the world’s seventh-largest oil exporter is around 2.8 million bpd. The state produced around 2.4 million bpd in May, according to a Reuters survey.

"The oil production strategy is still four million barrels per day by year 2020. All our plans are based on that," KOC Chairman Farouk Al-Zanki told Reuters. "These (discoveries) open a new horizon…Maybe now we have more potential from the deep (fields) to achieve the four million bpd target earlier." Sheikh Ali had said in May Kuwait might reach this target in 2012 after some recent finds. "The information wasn’t correct," Zanki said. "It was misstated. Still our strategy is to achieve four million bpd by 2020."

Recent discoveries in the north close to the Iraqi border were also encouraging and had prompted further exploration, Zanki said. In the east of the country, exploration was targeted on the area around Liya, where KOC was optimistic it would find light crude, he said. In the west, Kuwait’s most recent discovery of light crude was at Umm Rous, Zanki said.


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