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Saudi Arabia to pursue gas venture with Kuwait


Kuwait and Saudi Arabia are pushing ahead with plans to develop the undisputed part of the offshore Dorra gas field with the front-end engineering and design (FEED) work expected to be completed by June, industry sources said.

Bone of contention

Iran said in January it would develop its part of the field, which it calls Arash, that straddles the maritime borders of OPEC oil producers Kuwait, Saudi Arabia and Iran.

Dorra has been a bone of contention between Kuwait and Iran for decades and the two have yet to agree on their maritime borders in the northern Gulf almost 12 years after OPEC allies Riyadh and Kuwait reached agreement in 2000.

Need to boost supplies

Kuwait and Saudi Arabia urgently need to boost gas supplies to reduce domestic oil consumption and boost exports, which Dorra's estimated trillion cubic feet of gas and 310mn barrels of oil should help achieve.

"(The) investment decision already taken to develop the Dorra field," said a Gulf Arab industry source. "FEED completion is expected in June 2012."

He said Saudi Arabia and Kuwait would develop the undisputed part of the field after having split it in half to conduct seismic surveys. "Dorra is located within Kuwaiti territorial waters, it has nothing to do with Iran," Kuwaiti oil analyst Kamel al-Harami said.

A 50:50 venture

Another source said the award of engineering, procurement and construction (EPC) contracts is scheduled for December this year. Dorra is run by Al-Khafji Joint Operations Co (KJO), a 50:50 venture between state oil firms Saudi Aramco and Kuwait Petroleum Corp.

Kuwait hopes to nearly quadruple its gas output to more than four billion cubic feet per day (bcf/d) by 2030, including 0.5 bcf/d from Dorra.

Saudi gas production rose to 10.7 billion cubic feet per day (bcf) in 2011, up from just 1.65 bcf in 1981, and the world's biggest oil exporter plans to raise its gas production capacity to 16 bcf per day by 2020.

Saudi Arabia's proven gas reserves of 286 trillion cubic feet are the fourth largest in the world.