Kuwait Oil awards six drilling contracts to ADES of Saudi Arabia

State-owned Kuwait Oil awarded Saudi Arabia's ADES Holding six drilling contracts for onshore upstream work as Kuwait moves ahead in its expansion work to offset declines in some of its large aging oil fields.

The award covers ADES' four existing operating rigs in Kuwait as well as two newbuild units, ADES said in a May 26 statement to Tadawul, where its shares trade.

With the latest contracted work, ADES will "triple the size of [its] contracted fleet in Kuwait from four to 12 rigs upon deployment in 2025," Mohamed Farouk, CEO of ADES Holding, said in the statement.

The work includes deep drilling in Kuwait with work set to commence during the second and third quarters of 2025. The contract, valued at Riyals 2.65 billion ($707 million), is for a five-year term with a one-year optional extension, ADES said.

ADES currently has 10 operating rigs in Kuwait. Saudi companies such as ADES are looking to allocate their resources to other countries in the region and internationally following the cancellation of Saudi Aramco''s 1 million b/d capacity expansion plan.

Kuwait's upstream sector is seeing a ramp-up of activity as OPEC's fourth-largest producer looks to expand its production capacity to 4 million b/d by 2035. On May 17, the UAE's ADNOC Drilling said it received the approval to tender in Kuwait and Oman for oil and gas rig operations, expecting to bring "live services on the ground" in 2025 in those countries.

Around 3.65 million b/d of Kuwait's expanded production capacity will come from state-owned Kuwait Oil's assets, while 350,000 b/d of capacity will be from the country's portion of the Neutral Zone shared with Saudi Arabia.

Kuwait's dissolution of parliament on May 10 and the suspension of a few constitutional articles may augur a new era of positive business sentiment particularly for the OPEC producer's stagnant upstream sector.

Kuwait's stated production capacity is 2.9 million b/d of hydrocarbons, while output -- restrained due to the OPEC+ cuts -- was 2.44 million b/d in April, according to the latest Platts survey by S&P Global Commodity Insights.