KOC: how Kuwait will reach 4 million bopd

Kuwait

Ahmad Jaber Al-Eidan, CEO of Kuwait Oil Company (KOC), talks to The Energy Year about the key projects underpinning Kuwait’s targeted increase in oil production capacity to 4 million bopd and the country’s new drive for offshore drilling. State-owned KOC undertakes exploration, drilling and production of oil and gas in Kuwait.

This interview is featured in The Energy Year Kuwait 2023

What are the key projects underpinning KOC’s strategy for increasing Kuwait’s oil production capacity to 4 million bopd?
KOC is a strategy-driven organisation, where our 2040 Strategy requires the domestic upstream to achieve a production capacity of 4 million bopd by 2035 and sustain this capacity through 2040. KOC’s share of this production target is 3.65 million bopd, for which we have set a comprehensive roadmap that consists of strategic initiatives to increase and sustain resources in order to tackle new frontiers that would maintain this target. Our sister company KGOC also has an ambitious plan to increase production from the Al Wafra and Al Khafji fields.
Our strategy is based on developing standard oil and standard gas in the short to medium term, and offshore and new oil projects to tackle the new frontiers, alongside focusing on enhanced oil recovery (EOR) in mature fields. This includes significant investment in capital projects such as drilling wells and building facilities across the areas of KOC, with the aim of managing increasing water production and enhancing reservoir pressure.
In order to deliver these vital projects, KOC along with KPC is planning to invest a substantial budget of above KWD 12 billion [USD 39 billion] for the next five years. This capital will continue to increase to achieve the strategic targets. In addition, KOC is looking to strengthen its relationships with IOCs and service companies to assist in overcoming strategic challenges.

How significant is Kuwait’s offshore drilling campaign?
KOC considers offshore as a new challenge and a new frontier. We started the offshore exploration campaign a few years ago through comprehensive 2D-seismic projects in the open sea section of Kuwait’s territorial waters. The early indications were very promising, highlighting a number of offshore prospects that could be drilled back-to-back covering multiple geological ages such as Cretaceous and Jurassic formations.
To expedite the discovery of these prospects, KOC has contracted Halliburton to drill six wells over the next four years. The first well is currently being drilled, and is expected to be completed mid-year. Our offshore potential is crucial in the implementation of the growth strategy for our crude production capacity. Offshore exploration is considered one of the major pillars of KOC’s strategic initiatives. As far as how much potential we are expecting from the offshore, although the indications are very promising, the potential will be clearer once the exploration phase is completed.

What other exploration efforts are being conducted to increase proven oil and gas reserves?
For the onshore exploration, KOC has planned a comprehensive programme, where we are currently working on converting the explored Bahra Cretaceous reservoirs into production capacity, and it is progressing as planned. The Bahra field’s production capacity is expected to reach 110,000 bopd within the next two years. In addition, Jurassic exploration is going well, where we have recently discovered several prospects that are under production development plans as per our 2040 Strategy.

Tell us about the main projects and challenges for attaining KOC’s goal of increasing natural gas production to meet local demand.
Kuwait’s strategic target for non-associated gas is set based on the early discoveries in 2005 of the North Kuwait Jurassic layers. KOC has set a three-phase plan to achieve 950 mcf [27 mcm] per day from this resource. The implementation of phase I commenced in 2008 when the first facility was commissioned, by which 175 mcf [5 mcm] per day of non-associated gas was produced. Then, in 2014, we constructed three gas production facilities as part of phase I, and that raised the non-associated gas production to about 500 mcf [14.2 mcm] per day.
Currently and as part of phase III of this plan, KOC is enhancing existing gas facilities and constructing two additional major gas facilities (gas facilities 4 and 5), which when completed will help us reach our expected target of 950 mcf per day. All these efforts are coupled with drilling a significant number of Jurassic wells as well as conducting a workover programme to ensure the sustainability of current production.
In addition to the development of the current gas resource, we are continuously exploring for new gas, and have seen positive results specifically in the Jurassic and Palaeozoic eras.
KOC is looking to add more gas resources, which will help achieve our strategy of 1.5 bcf [42.5 mcm] per day by 2040. The technical challenges of achieving this target are tremendous, as these gas resources are very deep and have high temperature and high pressure. In addition, the deep reservoirs are very complex; therefore, the technologies needed to develop these reservoirs are essential. KOC is currently collaborating with international oil and service companies to implement solutions for these challenges.

What role does an increase in heavy oil production play in KOC’s strategy for expanding its production capacity?
Kuwait is known for producing Kuwait Export Crude (KEC), which is recognised globally for its quality. However, KOC has discovered huge heavy oil (HO) reserves in North Kuwait. This resource is considered a strategically important crude type, despite its relatively high cost of development, because we have a large HO reserve which needs to be exploited. Therefore, KOC made the strategic decision to explore this resource by developing the first HO project in the South Ratqa field. The project was completed in 2020, with a production capacity of 60,000 bopd.
An additional capacity of 20,000 bopd of heavy oil is produced from the Umm Niqa heavy oilfield, bringing our production of heavy oil to about 80,000 bopd. KOC plans on expanding activities in the South Ratqa field to reach 120,000 bopd in the upcoming years. This represents a technical and financial challenge for KOC, where we have engaged with IOCs to assist in setting the plan and implementing optimisation efforts to reduce costs of development and production.

How instrumental are new reservoir management and extraction techniques to maximising recovery?
KOC endeavours to apply cutting-edge technologies and best industry practices to maximise recovery in each and every producing reservoir, as well as tapping into additional resources from new potential accumulations. Reservoir studies, adoption of new technologies, best industry practices in drilling extended reach wells (ERD), multi-stage fracking completions and EOR techniques (gas injection, chemical injection and thermal application in heavy oil reservoirs) are under way as part of the company’s strategy.
KOC is also leading the way in conducting long-term studies to unleash hydrocarbons potential of the State of Kuwait, where we are active in keeping up with the industry boom with regards to exploration of offshore, deep horizons and unconventional resource development.
It is worth mentioning that KOC is also collaborating with IOCs to implement some of the technologies related to enhancing oil recovery to improve production in multiple fields.

How strategic are digitalisation and automation projects for enhancing KOC’s production performance?
KOC strategically decided to integrate digitalisation and automation projects across all aspects of our core business and functions as we believe that without digitalisation and automation, we will not be able to optimise the cost of operations, nor increase efficiency of production. Therefore, we have taken several steps to move towards this strategy. As such, several initiatives have been implemented, including the Kuwait Integrated Digital Field project, which is in its final stage of completion. This initiative enables all fields to be remotely monitored for more efficient decision-making. In addition, KOC implemented live dashboarding of activities related to oil and gas production. Moreover, we have transformed our Research & Technology Group into an Innovation Group to expand the value of this group by turning it into an effective solution provider for KOC’s core business challenges.
In addition to the above initiatives, and in line with the State of Kuwait’s “New Kuwait” vision, KOC has started its journey towards cloud computing adoption. The company announced its Cloud Computing Strategy in 2019. This strategy has been leading the way for system owners and solution providers to introduce their requirements to the cloud while maintaining KOC security and availability standards.

Which decarbonisation actions is KOC taking to ensure the sustainability of Kuwait’s petroleum sector?
KPC recently developed its 2050 Energy Transition Strategy, which outlines five abatement levers. To put this strategy into action, domestic upstream players (KOC and KGOC) developed a detailed implementation roadmap.
The primary focus of our existing decarbonisation initiatives is on efficiency and electrification, including an abatement potential of around 3.4 million tonnes of CO2e [CO2 equivalent]. We expect that implementing additional decarbonisation initiatives, of which some are an extension to the planned ones, will lead to the reduction of KOC’s GHG [greenhouse gas] footprint by around 4 million tonnes of CO2e, which constitutes a major contribution to the United Nations Sustainable Development Goals (SDGs).
In this context, KOC has identified several energy transition initiatives such as photovoltaic (PV) and concentrated solar power (CSP) and storage in order to achieve an installed renewable energy capacity of around 11 GW by 2045, which will require significant land use and capital funding “under scope 2.” Another initiative is carbon capture, utilisation and storage (CCUS), which KOC will use to abate the emissions remaining after other decarbonisation initiatives have been deployed.
Reforestation is another initiative the company is considering – establishing about 500 square kilometres of reforestation projects by 2050 as an ambitious plan to offset the remaining emissions. In addition, KOC will continue working towards achieving the World Bank Zero Routine Flaring by 2030 initiative and improving energy efficiency in the range of 12% by 2045.

What is your final message to local, regional and international investors?
As mentioned earlier, KOC has an ambitious 2040 strategy that is focused on growth and expansion of activities. Our portfolio is very promising and we have huge resources, which need to be developed in a very economical, safe and environmentally friendly manner. Our exploration and development requirements are substantial and we are therefore increasingly adding drilling and workover rigs, building and enhancing various facilities, and continuously working on improving our ever-growing operations.
In this context, there are a number of exciting and challenging opportunities for local, regional and international services providers, contractors and IOCs to assist us in delivering our strategy, and we look forward to working with our existing and potential partners to reach our goals and targets.

Read our latest insights on:

• Kuwait