CAIRO, Nov 30, 2006 (Dow Jones Newswires)
Kuwait has hired banks Morgan Stanley and Lazard to help the Gulf state reassess how it should go about developing several oil fields that are key to boosting its long-term oil supplies, Kuwait's oil minister told Dow Jones Newswires Thursday.
The banks have been enlisted to assess the costs - originally put at around $8.5 billion - and the extent to which international oil companies should participate in the long-standing and much-delayed oil production plan known as Project Kuwait.
"Morgan Stanley and Lazard are helping us," said Sheikh Ali al-Jarrah al-Sabah in an interview on the sidelines of an energy conference in the Egyptian capital.
The banks' findings should be completed "at some point" in 2007, Sheikh Ali added.
The $8.5 billion project was first proposed in the late 1990s in an effort to boost Kuwait's production capacity to 4.0 million barrels a day by 2020 from around 2.7 million b/d currently.
The plan, however, has been hobbled repeatedly by parliamentary concerns and feet-dragging over the form the contracts would take with companies and how much oversight parliament should have in vetting those contracts.
Some members of parliament, out of purely nationalist sentiment, also don't want international oil firms helping Kuwait to develop its biggest resource.
Sheikh Ali said Kuwait had recently managed to increase production from oil fields in the north of the country that are envisaged in Project Kuwait but said the increase didn't mean Kuwait no longer needed the assistance of international oil companies.
"Not at all. We need their technical assistance and know-how," said Sheikh Ali, a former banker and diplomat.
Kuwait Eyes Foreign Investment In Gas
Separately, Sheikh Ali said Kuwait plans to enlist international oil companies, including Chevron Corp. (CVX), to help develop the Gulf nation's natural gas reserves.
"We will invite companies to help us with the gas," he said, adding that number two U.S. oil major Chevron Corp. would be among those companies.
"We're still in discussions but this is what we're planning," said Sheikh Ali.
Earlier this year, Kuwait announced the discovery of around 40 trillion cubic feet of natural gas, although many energy analysts questioned the validity of the figure because it was based on a single well test.
By comparison, international oil companies normally conduct several well tests before calling a figure on potential oil or gas reserves.
Kuwait is hoping all of the new gas it claims to have comes to fruition to fuel badly needed gas-fired power plants, which are required for the state to keep up with rapidly growing electricity demand.
State-run oil firm Kuwait Oil Company recently said Kuwait plans to begin producing its gas at the end of 2007 and reach a production target of 180,000 million cubic feet a day in the early stages.
Meanwhile, in a departure from his predecessor, Sheikh Ali said Kuwait no longer planned to publicly address the issue over the quantity of Kuwait's proven oil reserves, which came into question in January.
"We have no obligation to release information on our reserves to the world or to anyone other than parliament and to the people of Kuwait," said Sheikh Ali who took over as oil minister in July.
"We have no plans to address this matter publicly," he said.
Kuwait officially puts its proven oil reserves at about 99 billion barrels, about 10% of the world's total. But a Petroleum Intelligence Weekly article in January, citing internal documents from state-run Kuwait Petroleum Corp., put the reserves at just about half of the official figures.
Copyright (c) 2006 Dow Jones & Company, Inc.
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