Kuwait Neutral Zone
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Plans to raise crude oil production capacity on the Kuwaiti side of the partitioned neutral zone - an area shared equally between Kuwait and Saudi Arabia on the Persian Gulf coast - could take two years longer than planned due to challenging market conditions, the deputy chairman of Kuwait Gulf Oil Co., or KGOC, said Monday.

KGOC, which is operating in the neutral zone on behalf of the Kuwaiti government, plans to raise its output to 350,000 barrels a day by adding 50,000 bpd of light crude production from the offshore Hout oil field by 2009.

However, the project may be completed "in 2009, 2010 or 2011," KGOC deputy chairman Fuad Al Abbassi told Dow Jones on the sidelines of the Saudi Energy Forum.

"Market conditions are very challenging," he said.

High economic growth rates in the U.S., the Middle East and Asia, in particular China, have led to a steep rise in demand for contractors, human resources, equipment and raw materials in the past three years, leading to price increases and shortages.

Under an investment program for the period 2005 through 2009, KGOC plans to invest as much as $1.8 billion in upgrading its existing infrastructure and maintaining production levels in the neutral zone.

The development of Hout will come on top of this program, Abbassi said.

KGOC will sign a contract with an international company to carry out a 3D seismic survey of the offshore Khafji oil field, which is also part of the neutral zone, by the end of November, Abbassi said.

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