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Shell to supply Kuwait LNG starting this summer

Reuters - Tuesday, June 23

* Kuwait expects first LNG delivery by Augus

* Shell eyeing more business opportunities with KPC

By Rania El Gamal

KUWAIT, June 22 - Royal Dutch Shell has signed a deal to supply Kuwait with liquefied natural gas starting this summer, a Shell spokeswoman said on Monday.

Kuwait is one of the world’s highest per capita consumers of electricity and is short of gas for power generation to meet peak summer demand for air conditioning.

“We’ve signed a sales and purchase agreement with Kuwait Petroleum Corporation for the provision of LNG,” the Shell spokeswoman said. State-owned KPC is the umbrella company for Kuwait’s energy operations.

Shell was also looking at several business opportunites with KPC, both locally and internationally, the spokeswoman added, declining to give more details.

She also declined to detail the volume of LNG to be delivered, the price, or the duration of the contract.

Kuwait has been building facilities to begin importing 500 million cubic feet per day of LNG, which is gas chilled to liquid form for export on specially designed tankers. The Gulf Arab state is also in negotiations with nearby Qatar to buy LNG to help meet the summer shortfall.

Kuwait expects its first LNG cargo from Shell by the start of August after completing the construction of its new import facility at the port of al-Ahmadi, KPC’s Managing Director of International Marketing, Abdullatif Al-Houti, told state news agency KUNA earlier.

A source close to KPC told Reuters Kuwait is still talking to Qatar but has yet reach a deal. Soft international markets for gas amid the global downtrun favoured buyers over sellers, he said.

“There is more supply than demand in the LNG market now. Production is expected to increase and prices have dropped significantly,” said the source. “Negotiations with Qatar are still ongoing but Kuwait needs gas now because demand for electricity has increased a lot over the recent years.”

Shell has signed several deals to take a role in nascent LNG trade within the Gulf. It has a supply deal with Dubai in the United Arab Emirates, and is also studying gas supply and imports to Bahrain.

Shell signed a deal with Iraq last year to collect gas that is burned at oilfields in the country’s south. Some of that gas may be exported as LNG.

(Additional reporting by Simon Webb; Editing by Simon Webb and William Hardy)

Kuwait Petroleum Signs Gas Import Deal With Shell, KUNA Reports

By Fiona MacDonald

June 22 (Bloomberg) — Kuwait Petroleum Corp. signed a deal with Royal Dutch Shell Plc to import liquefied natural gas, the state news agency KUNA reported, citing Abdullatif al-Houti, its managing director of international marketing.

The first LNG shipment is expected at the beginning of August after construction is completed on import facilities at Mina al-Ahmadi, al-Houti said, according to KUNA.

Kuwait, which is importing gas to fuel its power plants, signed the agreement with Shell International Trading Middle East Ltd., KUNA said.

LNG is natural gas that has been chilled to liquid form for transportation by ship to destinations not connected by pipeline. On arrival the fuel is turned into gas for pumping through links.

To contact the reporter on this story: Fiona MacDonald in Kuwait atFmacdonald4@bloomberg.net

Last Updated: June 22, 2009 08:09 EDT