Kuwait signs gas field service deal with Shell

State-run Kuwait Oil Company has signed a five-year service contract to develop pure gas fields in the country's north, a top official said yesterday.

Gas demand in the Gulf Arab country has outstripped supply, forcing the world's fourth-largest oil exporter to import liquefied natural gas (LNG).

Opec-member Kuwait produces most of its gas as a by-product of oil, so gas output falls when the country is pumping oil below capacity in line with Opec agreements, as it has been since late 2008.

Kuwait aims to develop gas fields not associated with oil to boost supply. This deal was for pure gas fields, Kuwait oil sector spokesman Sheik Talal Al Khaled Al Sabah said yesterday. Kuwait plans to boost output from the gas fields to 1 billion cubic feet per day (cfd) from around 140 million cfd, state news agency Kuna reported.

"The project is one of the most complex and challenging in terms of technology in any place in the world," Kuna reported Sheikh Talal as saying.

Kuwait has had problems with plans to boost output from the fields alone, and had hoped to boost production to 175 million cfd by now. "This project is both complicated and challenging, due to unconventional geological formations, difficult reservoir conditions and complex gas compositions," he said.

Kuwait and Shell have been negotiating a gas service deal for years.

Kuna gave no financial details on the deal with Shell.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.