Kuwait Heavy Oil Output to Hit 75,000 b/d by September
26 Jul 2020 by argusmedia.com
State-owned KPC's upstream arm KOC has been ramping up production from the South Ratqa heavy oil field and expects to reach its phase one plateau target of 60,000 b/d by September.
Production at the field in the northeast of the country began in late-February at a rate of 11,000 b/d, and has been slowly increasing output. According to KOC chief executive Emad Sultan, at the end of May, production had risen to 38,000 b/d.
KOC is using cyclic steam injection technology to extract South Ratqa's high-viscosity oil. This involves injecting large volumes of steam to heat the wells and thin the oil.
South Ratqa is one of two fields that make up Kuwait's Lower Fars heavy oil project. The second field, Umm Niqa, has produced around 15,000 b/d since 2016. By September, the incremental production from South Ratqa should bring the country's total heavy oil production to 75,000 b/d, Sultan said.
KOC says it aims to raise Umm Niqa output to 50,000 b/d within two years. In the longer run, KOC plans to raise combined output from the two fields to around 430,000 b/d by 2040. KOC will drill more than 1,500 wells to achieve this target.
Kuwait said last year that it planned to begin exports of a new heavy crude grade — dubbed Kuwait Extra Heavy Crude (KEHC) — in the first quarter of 2020. KEHC will have a gravity of 16°API and sulphur content of 4.93pc.
Sultan said state-oil firm KPC made its first shipment of the heavy sour South Ratqa crude in late May — a 500,000 bl cargo — followed shortly after by a second 700,000 bl cargo in June. KPC issued another tender in early July to sell 600,000 bl for loading over 20-21 July.
The price for this cargo was based on 14.5°API crude quality but with a price escalator/de-escalator applied if the API of the crude cargo was above or below this level.
However, South Ratqa exports are only expected to last until Kuwait's new 615,000 b/d al-Zour refinery, which is designed to process domestic heavy crude, comes on stream.
Kipic, the state-owned KPC subsidiary that manages operations at the refinery, was scheduled to commission al-Zour in the fourth quarter of this year. But sources close to the matter said that this is likely to be delayed after several service companies and contractors working on the mega-project have tried to invoke force majeure on account of the Covid-19 pandemic.