Kuwait produces a relatively modest volume of dry natural gas (around 343 billion cubic feet -- Bcf -- in 2004), the vast majority of which is "associated gas" (i.e., found and produced in conjunction with oil). Kuwait’s total gas production in 2004 was 396 Tcf. Despite reserves of only 55.5 trillion cubic feet (Tcf), Kuwait hopes to significantly increase its use of natural gas in electricity generation, water desalination, and petrochemicals to free up as much as 100,000 bbl/d of oil for export. Kuwait also hopes to reduce flaring of associated gas by tying together gathering centers.

Aside from imports, Kuwait hopes to increase its domestic natural gas production, both through reduced flaring of associated gas and through new drilling. Exploratory drilling is currently being undertaken at the Raudhatain oilfield, reaching geological formations much deeper than the oil deposits, which are believed to be rich in natural gas. In 2006, a 35-Tcf non-associated find was discovered in northern Kuwait at the free natural gas fields in Sabriya and Umm Niqa areas. It is Kuwait's first natural gas find that was not part of an oil field. Initial studies proved that 60 to 70 percent of the discovered volume can be utilized. According to KOC, the early stages of the actual gas production would start at the end of 2007 after completing the needed surface installations.

Negotiations are continuing between Kuwait and Iran on the issue of the disputed Dorra offshore natural gas field. The Dorra field has been claimed by Saudi Arabia, Kuwait, and Iran, and may contain up to 11 trillion cubic feet (Tcf) of recoverable natural gas reserves. In July 2000, Saudi Arabia and Kuwait agreed on an equal sharing of the natural gas resources between the two countries. In 2000, Iran began drilling Dorra unilaterally, but stopped after protests from Kuwait and Saudi Arabia. In 2006, Kuwait launched a seismic tender for the Durra field. It aims to produce roughly 22.2 Bcf/d from the field by 2009.

In April 2006, Australia’s WorleyParsons was awarded the $222 million engineering, procurement and construction management (EPCM) contract covering the Mina al-Ahmadi - Subiya natural gas-oil pipeline project. The project includes a 20-inch-diameter, 106-mile-long pipeline to supply natural gas and fuel for the proposed Subiya power station, north of Kuwait City. The Subiya feedstock scheme is the first local oil and natural gas project to be awarded on an EPCM basis as KOC adopted the new approach to speed up project completion.

In July 2000, Kuwait and Qatar signed a memorandum of understanding (MOU) for possible import of Qatari gas from the offshore North Field -- the largest non-associated natural gas field in the world -- into Kuwait. In February 2003, memoranda of understanding were signed for a $2 billion pipeline project from Qatar's port of Ras Laffan to Al-Zour South in southern Kuwait. Qatar Petroleum and ExxonMobil (operator of Qatar's North Field) also have signed an agreement on supplying the natural gas. Saudi Arabia has expressed opposition to the pipeline, which is to pass through Saudi territorial waters, and has not granted approval.

Besides Qatar, Kuwait is also looking at importing natural gas from Iran, most likely from its huge South Pars gas field. Iran and Kuwait signed a preliminary memorandum of understanding for natural gas sales in March 2005. The gas is to be used for power generation and water desalination. In any event, a natural gas deal with Iran is being held up by the need to resolve maritime border issues in the region, specifically on the Dorra offshore natural gas field (see below).

Prior to the 1990/1991 Gulf War, Kuwait received significant volumes of natural gas from Iraq. The gas came from Iraq's southern Rumaila field through a 40-inch, 100-mile, 300 Mmcf/d pipeline to Kuwait's central manifold at Ahmadi. The natural gas was used in Kuwaiti electric power stations and liquefied petroleum gas (LPG) plants. Currently, Kuwait and Iraq are making plans to restart the pipeline. A memorandum of understanding between the two governments was concluded in December 2004. The first phase of the project is modest, involving only 35 million cubic feet per day (Mmcf/d), which would be transported through the existing pipeline. The second phase would involve an $800 million investment in refurbishment of the pipeline and associated pumping stations, which would allow the volume to increase to 200 Mmcf/d. For the time being, though, the security situation in Iraq has prevented even the first phase of the plan from being implemented. It remains unclear whether Kuwaiti gas demand could support both Iranian, Qatari, and Iraqi export projects simultaneously.