Chevron Neutral Zone Delay Jeopardizes Kuwait 2020 Crude Target

21 Sep 2012 Issue: 55 / 39

The final investment decision (FID) on Chevron’s $10-15bn, 500,000 b/d Wafra crude project in the Neutral Zone is delayed to 2016 – five years after the original scheduled date – with start-up now put at 2019. Kuwait is relying on its 50% Neutral Zone output share to hit its 4mn b/d 2020 crude output target, which looks increasingly unrealistic.

Saudi Arabia and Kuwait, which jointly govern the Neutral Zone and share its oil production 50:50, depend on the Chevron-led steam injection project to reverse decline in their onshore oil output, which has dropped to about 200,000 b/d from 240,000-260,000 b/d in 2010. Saudi Arabian Chevron (SAC) – on behalf of Saudi Aramco – jointly operates onshore fields with state-owned Kuwait Gulf Oil Company (KGOC), and markets the Saudi share of the output under a 30-year concession that started in 2009.

Hisham al-Rifa’i, KGOC’s Managing Director, said this week that if the scheme goes ahead it will triple onshore production to about 600,000 b/d. The latest delay would mean first steam injection in 2019, 100,000 b/d output by mid-2021 and 300,000 b/d by end-2022, reaching full 500,000 b/d output by 2026-28. This would plateau for a few years before falling to 300,000 b/d by about 2040. The lifetime cost will be $30-40bn (MEES, 19 December). (CONTINUED - 840 WORDS)