Ensuring Energy Security Is a Costly Affair
Syed Rashid Husain 

Oil is a costly affair. When US Energy Secretary Samuel Bodman was last here in Riyadh, he stressed on the need to invest �billions of dollars� in the industry annually, so as to achieve �global energy security.�

The International Energy Agency estimates that $22 trillion of investments would be needed between now and 2030 if the world is to meet expected energy demand.

While the debate about ongoing investments in the upstream sector continues, recent reports indicate that despite clouds on the horizon for crude demand, OPEC states have embarked upon substantial upstream and downstream investments.

Consequently, OPEC crude oil production capacity (excluding Iraq) is projected to increase to around 36.9 mbpd by 2010 from 31.7 mbpd in 2005.

In the medium term, over 100 projects, with an overall estimated cost of some $120 billion are being undertaken by OPEC member countries (excluding Iraq).

[Organization of Petroleum Exporting Countries (OPEC) members include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.]

These projects do not include all energy infrastructure projects, such as pipelines, export terminals and downstream expansions.

OPEC heavyweight Saudi Arabia is investing $50 billion plus in attempts to meet the growing demand of the consumers. Plans to bring on stream 12.5 million bpd capacity by 2009 are reported on track.

The Abu Hadriyah, Fadhili and Khursaniyah fields are currently under development, would produce 500,000 bpd of Arabian Light crude oil, plus more than one billion standard cubic feet/day (scfd) of associated gas.

The Khurais project, which will also include production from the Abu Jifan and Mazalij fields, is projected to produce 1.2 million bpd of Arab Light crude oil in 2009.

Located deep in the Rub Al-Khali, or Empty Quarter, the Shaybah field has been delivering 500,000 bpd of Arab Extra Light crude oil since its start-up in 1998. 

Plans call for increasing oil production capacity to one million bpd, with the first increment of 250,000 bpd under implementation and slated to come on stream by the end 2008 / early 2009.

The Nuayyim project, a central Arabian field, is slated to add 100,000 bpd of Arabian Super Light crude oil by 2008. The Manifa field development project is another mammoth project. 

The $10-billion plus Manifa development program, Aramco�s largest-ever offshore project, aims to add 900,000 barrels a day of Arabian Heavy crude and 65,000 barrels a day of condensate production. 

The project will also process 90 million cubic feet a day of natural gas and is currently scheduled to come on stream by mid 2011.

In conjunction with the expansion of production facilities in the Southern Area, Qurayyah, the world�s largest seawater-treatment plant, is also being expanded. Capacity has been increased by 2.5 million bpd, thus giving a total capacity of nine million bpd, matching the dual needs of maintaining reservoir pressure and conserving precious ground water. An additional expansion of 4.2 million bpd is planned in conjunction with the Khurais project.

Kuwait has plans to spend billions of dollars over the next five years to upgrade its vital energy sector.

�We plan projects worth $51 billion for upstream and downstream projects in the oil sector.. ..up until early 2013,� Saad Al-Shuwaib, chief executive officer of national conglomerate Kuwait Petroleum Corp. (KPC), told a conference recently.

The projects include raising Kuwait�s oil output capacity from 2.7 million barrels per day (bpd) to four million bpd by 2020, besides building a large refinery and upgrading existing refineries. The new figure represents a sharp increase as initial estimates had projected spending around $66 billion in the energy sector through to 2020. 

The oil output expansion involves the controversial Kuwait Project, which seeks the assistance of international oil companies to develop the nation�s northern oilfields. 

The estimated $8.5 billion project aims to double production to 900,000 bpd from four oilfields but has been stalled by the opposition-controlled Parliament. 

�So far, we have only been working on less than one-third of Kuwait�s total area. Now, we plan to start exploration and drilling in other areas,� he said.

Kuwait signed a preliminary deal with ExxonMobil Corp. in October to produce heavy oil in the north of the country. It is discussing similar contracts with BP and Chevron Corp, too.

More than $20 billion will also be spent for the development of Kuwait�s downstream sector. This involves the construction of a new 615,000 bpd refinery at a cost of $14.6 billion and upgrading two of the three existing refineries in a multi-billion-dollar project.

Kuwait and Saudi Arabia are also reportedly on track to boost oil output capacity in the shared Neutral Zone between the two countries by 50,000 barrels a day by 2009.

This would come entirely from offshore drilling, taking the total capacity for the zone to around 624,000 bpd from 574,000 bpd, Bader 

Al-Khashti, managing director of Kuwait Gulf Oil Company, the operator on Kuwait�s side of the zone was quoted as saying. New wells had been drilled in the offshore area and new pumps installed in sub-sea wells to raise capacity, he added.

Major African oil producer Nigeria also plans to invest about $15 to $20 billion annually on oil exploration and production. 

The production capacity expansion plan will put Nigeria in the forefront of investments in the Gulf of Guinea. This region also comprises Angola, Cameroon, Gabon, Congo, Equatorial Guinea and Sao Tome and Principe.

In all, it has estimated oil reserves of about 60 billion barrels. Nigeria�s crude oil reserves currently stand at about 35 billion barrels, making it an interesting source for incremental crude in the world scene. It is already Africa�s biggest oil producer, accounting for a daily output of 2.1 million barrels.

Source: Arab News

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