Kuwait to Begin Northern Oilfield Project Later this Year

Bidding in Kuwait's controversial plan to bring in international oil companies to develop its northern oilfields is due to start in the second half of 2004, Kuwait Oil Company (KOC) said in remarks published on Sunday.

Bader al-Zuwayer, KOC's Public Relations and Information Manager, told English-language daily Arab Times the legal contract for the multi-billion-dollar Project Kuwait had not been finalized yet "but has progressed to an advanced stage".

"The Northern Oilfields Project is an important national project and the process of receiving approvals at different levels required will take some time," he said.

"We expect that all necessary approvals will be obtained and that the bidding process will commence some time in the second half of 2004."

In November, Nader Sultan, Deputy Chairman and CEO of Kuwait Petroleum Corporation (KPC), KOC's parent, said the three oil major-led consortiums vying for the project could be invited to bid before the summer.

The three groups of companies which prequalified are led by ExxonMobil, ChevronTexaco and BP.

Some parliamentarians oppose bringing foreigners into Kuwait, which has a 10th of global petroleum reserves.

But Zuwayer said the companies would not be given ownership or similar rights to Kuwait's oil and gas resources, adding that the legal basis for the project would be a services contract and the oil companies would receive cash.

The contract required these firms "to bring their best technologies and practices to Kuwait to enhance development of northern oil fields and improve long-term recoveries...", he added.

"Kuwait recognizes that the contract must be reasonably attractive to the IOC's (international oil companies) if they are to be expected to bring the benefits of their technologies and experience to Kuwait," Zuwayer said.

This was vital since key north Kuwait reservoirs were technically challenging and hadn't been developed to their full potential, he said.

Zuwayer declined to give a figure for the cost of the project, which has been put as high as $7 billion.

Industry sources say the winning consortium will be involved in raising output from the northern fields to about 900,000 barrels per day (bpd) from around 450,000 bpd at present.

Zuwayer said the development activity associated with raising production levels to 900,000 bpd would benefit the economy as service providers and suppliers would be asked to meet the needs of the project.