Kuwait to seek Iranian gas after Qatari deal
Date: 31-Jan-02
Country: KUWAIT
Author: Ashraf Fouad
But Adel al-Subaih told reporters that the deal with Qatar, to be finalised by mid 2002, was not the end of talks with non-Arab Iran for additional supplies of rich gas for petrochemical and other industrial projects in Kuwait.
"This is not an alternative to rich gas from Iran and we still hope to reach a deal with the Iranian side," he added.
Subaih did not give details for Wednesday's deal, like pricing levels and volumes due to a secrecy accord with Qatar but he said first supplies were due in Kuwait by pipeline by the end of 2005, reaching full capacity by mid-2006.
Exxon Mobil Corp will build the pipeline as part of the comprehensive deal which will cover all aspects of the project. The world's largest publicly traded oil firm had earlier said the project's capacity will run at around 1.75 billion cubic feet (49.55 million cu metres) per day.
"This is an historic agreement and one of the first projects for intra Gulf Arab trade at such a (large) scale," the minister said before flying for the one-day visit.
He also stressed the environmental benefits of using Qatari gas as opposed to the current release of sulphur from flaring domestic supplies - an issue which has attracted repeated internal criticism despite official assurances that acceptable pollution levels were being met.
The gas will be mainly used for power generation in Kuwait which the minister says is the world's largest per capita consumer, "even more than in Qatar where electricity is free".
Power in Kuwait is heavily subsidised but the government has plans to eventually privatise the sector and raise prices for large consumers.
Subaih said during winter months when power consumption drops compared to peaks in the summer, Qatari gas will be injected into Burgan oil field to boost pressure and crude production from one of the world's largest single reserve.
"We will draw the gas back up in the summer after storing it in Burgan," added Subaih who is a former electricity minister.
The small OPEC state of some 2.2 million people could face power shortages by the summer of 2003, prompting the government to set up a special committee to swiftly approve power generation projects by bypassing usual red tape at several state bodies, diplomats and industry executives said.
One such project in the pipeline has major world firms applying to build up to eight gas turbines for $400 million as a first step in a major plan worth some $2.5 billion to boost power generation.
Kuwait is seeking an additional 1,000 megawatts by the year 2004. The requirement calls for gas turbines of 100-160 megawatt each, with 500 megawatts coming online in the summer of 2003 the remaining 500 megawatts are due the following year.
Consumption soars during the blistering summer months when temperatures in the shade exceed 50 Celcius (125 Fahrenhiet) and many residents use air conditioners day and night.
The larger portion of Kuwait's plan will involve a $1.8 billion steam turbine power plant which could adpot a build-operate-transfer (BOT) formula as part of government steps to cut capital spending on large ticket items.
