Kuwait will be ready to start imports of liquefied natural gas (LNG) this summer, indicating the country remains willing to pay a premium for gas to resolve a recurring electricity crisis. Kuwait is a major exporter of oil but has struggled to raise its gas output, forcing its government to become the second in the region to turn to the more expensive LNG. Dubai signed a deal with Qatar earlier this year.
Mohammed Husain, the deputy chairman of the Kuwait Oil Company (KOC), said offshore facilities to receive LNG shipments would be ready by May, but terms had not yet been finalised with sellers. "From the facilities [side] we are already prepared for it," he said on the sidelines of a conference in Dubai. "We are hoping for this summer, but that is yet to be seen. The question is where to get the gas."
The need for one the world's largest hydrocarbon producers to import LNG highlights the gas shortage around the region and the reluctance of major gas holders, including Qatar and Iran, to agree to new deals to supply gas via pipeline. Kuwait has long struggled to produce enough gas. Until 2000, experts had said there were no commercial volumes outside of oil wells to be found anywhere in the country, Mr Husain said.
KOC, the production subsidiary of Kuwait Petroleum Company, was producing between 140 and 145 million cubic feet (cu ft) of gas per day as part of the first phase of gas development, Mr Husain said. The company was building facilities, including a pipeline and new wells, to raise that figure to 600 million cu ft per day by 2011 or 2012, he said, adding that KOC was on track to reach its long-held goal of producing 1 billion cu ft a day by 2015.
"With the gas in Kuwait we are not going to stop at all," he said. But Mr Husain acknowledged that the country's oil production cuts, which were made in line with the agreements within Opec, were affecting Kuwait's gas output as well, since some of the gas was produced along with the pumping of crude oil. According to the long-term gas development plan, the country should be producing 165 million cu ft per day.
New gas could not come soon enough for the Kuwaiti power grid, which has struggled to supply enough electricity during the hottest months, when demand is highest. Kuwaitis suffered rolling power cuts last summer, including a cut in August that disrupted production at the Shuaiba oil refinery. In response, the government unveiled the LNG import strategy earlier this year that it said would provide enough gas until domestic supplies increase.
A regasification ship rented from the US company Excelerate will dock at offshore Kuwaiti facilities during the summer months. Incoming LNG carriers will pull up alongside and pump LNG directly into the Excelerate ship, which will then warm the liquid into gas and pump it into the pipeline network. The Excelerate ship can receive up to 500 million cu ft of gas per day, according to the company's website.
Securing suppliers of LNG could prove a challenge, however. Last February, the chief executive of Kuwait Petroleum Corporation, Saad al Shuwaib, told a conference in Kuwait that the country would import the gas from Qatar. Mr Husain was more guarded yesterday and declined to specify Qatar as a potential supplier. "Until they reach a deal, there is no deal," he said. cstanton@thenational.ae
