Contractors prepare to bid on Kuwaiti gas project

22 February 2016

Three packages are expected to be worth a total of around $1.5bn

Contractors are preparing to bid on two reissued packages that form part of phase two of Kuwait’s Jurassic Non Associated Oil and Gas Reserves Expansion.

The deadline for bids to be submitted for the reissued packages is 23 February.

Phase two of Kuwait’s Jurassic Non Associated Oil and Gas Reserves Expansion is made up of a total of three packages, which are estimated to be worth around $1.5bn in total.

The three packages were all originally tendered in late 2015.

They involve the production of about 120,000 barrels a day (b/d) of wet crude and more than 300 million cubic feet a day (cf/d) of sour gas from the West Raudhatain, East Raudhatain, Umm Niqa and Dhabi fields in north Kuwait.

The two contracts that have been retendered are the West Raudhatain and East Raudhatain packages.

On 27 January 2016 US-based oil services company Schlumberger signed a contract worth KD143m ($477.6m) for the Umm Niqa package.

Under the rules of the origional tender Schlumberger was only permitted to win one of the three packages, but this was changed in the retender documents.

Under the new rules Slumberger is permitted to win two out of the three packages.

“As Slumberger has already signed a contract for one of the packages it has a distinct advantage over the other bidders,” said one industry source. “The facilities in each package are very similar - so Slumberger will be able to cut costs if it wins two packages.”

Only three companies out of the 19 prequalifiers submitted prices during the original tender process.

In November US-based Schlumberger was announced as the low bidder on all three contracts.

Schlumberger submitted an offer of $421m each for the identical West Raudhatain and East Raudhatain packages, and $475m for the Umm Niqa and Sabriya package.

Saudi Arabia’s Al-Khorayef Commercial bid $523m and $592m for the same three packages respectively, while the local Safwan Petroleum Technologies Company (Spetco) offered prices of $489m and $615m.

Each deal involves the build and five-year operation and maintenance of gasoil separation and treatment systems, export pipelines, effluent water treatment facilities, and vapour gas recovery compression systems. The Umm Niqa package also has a sulphur recovery unit, which accounts for its higher cost.

The US’ Fluor conducted the project’s front-end engineering and design (feed).

A $1.56bn contract to develop reserves in the Jurassic gas fields was awarded to the local Kharafi National in 2010. The project aimed to produce 100,000 b/d of wet sour crude and up to 510 million cf/d of gas, along with a sulphur granulation plant. It used a build-operate-transfer (BOT) contracting model, where the contractor would provide the financing for the construction.

After appointing Italy’s Saipem as subcontractor in 2011, then replacing it with the UK’s Petrofac in 2012, the project stalled when Kharafi National failed to secure the financing it needed to proceed with the scheme.

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