(Bloomberg) — Qatar has signed a new 15-year liquefied natural gas (LNG) contract with Kuwait, the second supply deal to help ease the burden on power plants that were already forced to cut production this summer.
Kuwait was forced to cut off electricity supplies in June – a rare event for the Middle Eastern oil state as brutal summer heat increased demand and gas supplies could not keep up. The Ministry of Electricity, Water and Renewable Energy warned that controlled blackouts could be enforced in some areas during the hot months.
Qatar is already Kuwait’s largest supplier and has a contract to supply up to 3 million tonnes per year until 2035. The company will begin deliveries under the new contract in January.
“Together, the two contracts will ultimately increase the amount of liquefied natural gas we can import from Qatar to up to 5 million tons,” Kuwait Petroleum Corp.’s managing director of international marketing Sheikh Khaled Al-Malik Al-Sabah said after the contract was signed on Monday.
The latest deal adds to Qatar’s agreements with companies including TotalEnergies SE, Shell Plc, China Petroleum & Chemical Corp. and Taiwan’s CPC Corp. as the country continues to expand its massive LNG projects. However, the country has yet to align customers for the additional volumes generated by increasing production capacity by 64 percent to 126 million tonnes per year. Doha plans to increase capacity even further to 142 million tonnes by the end of the decade.
The agreement shows that KPC is committed to ensuring “reliable and sustainable energy supplies,” said Chairman Sheikh Nawaf Al-Sabah. It also aims to meet the country’s needs for clean energy, particularly for power generation, said Sheikh Nawaf, who signed the agreement with Qatar’s Energy Minister Saad Al-Kaabi.
Power outages in KuwaitIn Kuwait, the Energy Ministry said earlier this month that Kuwait National Petroleum Co.’s gas processing facilities had come to a complete halt, affecting supplies to turbines at two power plants and water desalination plants. The ministry said it had been forced to shut down some power generation facilities at the Subiya and West Doha power plants.
The increase in gas demand also comes as Kuwait has decided to phase out the burning of oil to generate electricity. The country’s consumption rose far beyond domestic production. The country imported 6.3 million tons of LNG, including spot cargoes, in 2023, according to ship-tracking data monitored by Bloomberg.
Kuwait projects demand of 14 million tonnes per year by 2035, based on the scale of its import infrastructure. In 2021, a terminal with a capacity of 22 million tonnes per year was opened, the first permanent facility to receive liquefied natural gas in the Persian Gulf.
