Complex Made Simple

Aside from Saudi and the UAE, how is the GCC faring with oil production?

Despite global calls to end oil & gas investments, it seems unlikely to do so in the GCC as budgets depend on these investments and production levels. But excluding Saudi and the UAE, are other countries ramping up production?

Oil will still be the world's number-one source of energy until at least 2045 Bahrain announced the discovery of a large field of shale oil, with an estimated oil reserve of 80 billion barrels Al Shaheen is crucial for Qatar because it accounts for about half of the country’s total oil production

On 18 May 2021, the International Energy Agency (IEA) published a landmark report on a pathway to net-zero carbon emissions by 2050. Among the many proposals in the report is the call to immediately end investments in oil and gas exploration and development.

Population growth in developing countries will ensure oil is the world’s number-one source of energy until at least 2045, when coal will still comprise almost 1/5th of energy demand, and only 1 in five cars on the roads will be electric.

Fossil fuels’ combined share of the energy mix is forecast to fall to 70% in 2045 from 80% last year, but that will still mean an overall increase in oil and gas production.

In the GCC, it’s unlikely for oil exploration to stop as many of these countries’ budgets depend on these investments and oil production levels.

In July this year, it was decided that the UAE will see its baseline production increase to 3.5 million bpd starting May 2022 from today’s 3.168 million. Saudi Arabia and Russia will see their baselines rise to 11.5 million bpd each from the current 11 million.

UAE and Saudi are always in the news, especially as the two had a recent spat about oil production that made global headlines.

The remaining Gulf countries are usually in the shadows, but today we bring them to light, especially some have interesting projects underway in oil and gas sectors.

Bahrain

Bahrain recently announced its intention to drill 900 oil wells over the next 5 years, according to an official report issued by Tatweer Petroleum, the oil arm of Bahraini government investments.

According to official statistics from the National Oil and Gas Authority, Bahrain produced 1.1 million barrels in 2020 and exported 84 million barrels of oil derivatives from which Saudi Aramco produced more than 350,000 barrels for Bahrain.

In April 2018, Bahrain announced the discovery of a large field of shale oil, with an estimated oil reserve of 80 billion barrels, the second largest deposit of shale oil in the world.

A source told The Media Line that “Bahrain announced in December 2020 the offering of four oil areas for investment,” which are located in the Persian Gulf. “These areas surrounding Bahrain are definitely rich in oil,” he said.

The source, also noted that “there is a joint field near the Hawar Islands with Qatar, which contains huge quantities of oil and natural gas.”

The source said that “Shale oil in Bahrain is low-cost; its extraction costs will not exceed $35 a barrel, and with prices rising above $50 a barrel, it will be worthwhile to export it.”

Turkish oil expert Anash Dermilar told The Media Line that “Turkish companies are seeking to invest in oil in Bahrain, and it is one of the first countries that offered Bahrain a chance to start investing in these fields.”

Kuwait

State-owned Kuwait Oil Co (KOC). has started operations at a new gathering center that can handle 100,000 bpd of crude oil as the OPEC producer forges ahead with plans to expand its production capacity.

“GC-31 in northern Kuwait will also process 62.5 million cubic feet per day (MMcf/d) of associated gas,” KOC said in a statement carried by state-owned news agency KUNA on Sept 18.

A gathering center is a facility that collects oil from a field to be transferred usually by pipelines.

Petrofac built GC-31, one of three gathering centers that the UK company has constructed for KOC, each of which will be able to produce 100,000 bpd, along with associated water and gas production.

Petrofac has also won a $1.3 billion project to construct GC-32 at Burgan, the country’s largest oil field located in the southeast.  

The GC-32 project is the first sour crude gathering center to be developed at Burgan and will process 120,000 bpd of crude and associated gas from the Arifjan, Marat, Minagish Oolite and Burgan Wara high hydrogen sulfide fields.

In 2018, Kuwait Petroleum Corp, the parent company of KOC, revealed plans to raise production capacity to 4.75 million bpd by 2040. It has revised expansion plans over the years, with a goal of 4 million bpd set for 2020 which hasn’t been updated. Kuwait currently has production capacity of about 3 million bpd.

Kuwait’s baseline of 2.8 million bpd through April 2022 will be raised to 3 million bpd starting in May 2022.

Oman

The majority of Oman’s oil exploration and production activities are conducted onshore; however, there are also several offshore activity sites such as the offshore Block 52, awarded to Eni and Oman Oil Company Exploration & Production LLC, Yumna oilfield in block 50 offshore Oman, and West Bukha field in Block 8 located offshore in the Strait of Hormuz.

Onshore, the Petroleum Development Oman’s (PDO) Yibal Khuff Project (YKP) has started production, which, when fully operational, will deliver five million cubic meters of gas per day and around 20,000 bpd of crude.

The installation’s first sour wells were opened earlier this month introducing sour oil to the YKP Central Processing Facility, and the project has already started exporting crude oil to the Main Oil Line, reported Oman News Agency (ONA), adding that the plant’s capacity will be ramped up over the coming months.

 Qatar

PetroVietnam Technical Services Corporation (PTSC) has landed a sizeable subcontract from South Korean giant Daewoo Shipbuilding & Marine Engineering for work on North Oil Company’s (NOC’s) Gallaf project offshore Qatar.

Daewoo recently landed a major contract from NOC to build a large fixed offshore platform as part of Package 6 in the Al-Shaheen oilfield expansion project, which involves the Gallaf development.

al Shaheen offshore Qatar

NOC, which is a partnership between state-controlled Qatar Petroleum (QP) and France’s TotalEnergie, is executing the multi-phase project to maintain output at Al Shaheen, Qatar’s largest offshore oilfield.

The main Package 6 contract is worth $630 million, according to Daewoo. The value of PTSC’s subcontract could not be independently confirmed.

Al Shaheen is crucial for Qatar because it accounts for about half of the country’s total oil production, which according to QP’s annual 2019 review was running at just over 592,000 barrels per day. The May 2021 production of crude oil for Qatar was 1.36 million bpd.