Kuwait's Parliament to Make Oilfield Project a Priority

Kuwait Petroleum Corp's Chief Executive Officer, Nader Sultan, said a long-delayed project allowing foreign oil companies back into the country would move forward soon. KPC hopes to invite final bids on its multi-billion-dollar northern oilfield redevelopment project before next summer following contract discussions with foreign firms and political approval for the long-planned deal,

"Our government has advised us that this is a priority for this parliament," Sultan said. KPC has invited three consortiums to bid for upstream oil investments for which new legislation might be required. ExxonMobil and ChevronTexaco plus BP lead the three groups that have submitted bids.

"Hopefully, we'll now have a very clear idea what is the political process that both sides - government and parliament - can agree to," Sultan said at a London oil conference. Parliament's finance committee will review draft contracts in the coming weeks, he said.

Some influential lawmakers want to keep the development a domestic affair and parliament has yet to clarify the legal framework for the deal.

Sultan said there were three choices: the government could forego parliamentary approval on the view that the country's constitution does not require service agreements to be passed into law; parliament could pass an umbrella law that would clear the way for the new projects; or lawmakers could opt to scrutinize each contract individually.

"This (clarification) is a priority for this term in parliament," he told the Oil and Money conference in London. The current term runs until next summer.

Commercial discussions over contracts and terms can continue in parallel with the political process "right up until the point that we request bids," he said.

KPC hopes to finalize the roughly 20-year contract terms by next summer, Sultan said. The terms foresee foreign companies taking over operations on some northern fields to roughly double their production to around 900,000 barrels per day.

"Our original objective was to reach 900,000 bpd, but that was not a cap so we asked companies how much they could produce and how long it could be sustained," he said.

KPC will pay the companies fees based on production levels and cost savings, he said.

Sultan did not give any time frame for awarding the project or reaching the higher plateau, but said there would be a six-month transition period for companies to take over operations on the fields.