Kuwait’s growing need for LNG imports

05 October 2011

Kwok W Wan, LONDON: Kuwait will import up to 42% more liquefied natural gas (LNG) this year as it extends its buying period by a month into November. The country expects to import 43-47 cargoes this year, compared with 33 in 2010 and 11 in 2009, says state-owned Kuwait Petroleum (KPC).

Kuwait began importing LNG in 2009 on a seasonal basis - from May to October - to meet growing electricity demand for cooling during the summer and to reduce crude oil burn in its power stations (PE 8/10 p20). LNG imports were to be a temporary solution until 2013 while domestic gas resources were developed, but KPC is now considering a permanent import facility to meet soaring demand.

The country uses Excelerate tankers as a floating import terminal, with the Exquisite vessel berthed offshore Kuwait since March according to AIS Live ship-tracking data. Excelerate vessels, which can regasify LNG onboard the tanker, have a capacity of around 5.2 million tonnes a year, or around 600 million cubic feet a day (cf/d).

Kuwait imported 2.1 million tonnes of LNG in 2010 (nearly 100 billion cf of gas), sourced mainly from Oman, Egypt, and Trinidad and Tobago, according to Cedigaz. The country's gas industry, meanwhile, produced 415 billion cf, while consumption was 513 billion cf.

Growing demand

And Kuwait is set to import more LNG to feed its power sector. Electricity generating capacity stood at 11.3 gigawatts (GW) in 2008, but Kuwait plans to add another 16 GW by 2014, mainly gas-fired turbines.

The Oxford Energy Institute estimates demand could climb to 6.36 billion cf by 2015, but with domestic gas production unlikely to keep pace, pricey LNG imports are the only option - to meet the supply deficit in 2015 would require 4.6 million tonnes of LNG imports.

The country could be forced to buy spot LNG cargoes, which are more than seven times higher than subsidised domestic gas prices. Kuwait DES cargoes were around $15/million Btu at the end of September, according to ICIS Heren.

KPC also has a four year LNG contract with Shell and energy trader Vitol, which was signed in May 2010. Under the agreement, Shell will deliver two cargoes with an option of a third, while Vitol will deliver one with an option of a second. It is also thought to be buying spot cargoes from BG Group, originating from Trinidad and Tobago, with BG offering a significant discount.

Oil-rich Kuwait, with 7.3% of the world's proved resources, is not so well endowed with gas - at 63 trillion cf, under 1% of global reserves.



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