The US’ McDermott and South Korea’s Daewoo Engineering & Construction have been awarded two contracts worth an estimated $230m for work at the Hout field by Khafji Joint Operations (KJO), the Saudi Arabia/Kuwait joint venture operating in the neutral zone.

The two contractors submitted the lowest bids for two available engineering, procurement and construction (EPC) packages, covering onshore and offshore facility upgrades at the end of 2011. McDermott proposed a price of $106.5m for the offshore work, while Daewoo bid $124.5m for the onshore package.

Four firms bid for the onshore work, which includes the construction of crude oil and gas processing plants and distribution facilities. These were; Daewoo, ABB of Switzerland, France’s Technip and Larson & Toubro of India.

There were also four bids for offshore work from McDermott, Technip, Hyundai Heavy Industries of South Korea and the UAE’s National Petroleum Construction Company. The offshore package includes the demolition and replacement of some existing offshore platforms, the laying of a 50-kilometre pipeline to the onshore facilities, as well as monitoring stations.

Daewoo and McDermott have also signed a three-way memorandum of understanding with KJO to coordinate onshore and offshore work at the field and mitigate any issues where the contractors and client interface, according to a source close to the projects.

The two packages cover onshore and offshore upgrades of the current Hout field facilities, including processing the gas that is currently flared. Work is expected to last 36 months, with completion due for the end of 2014. The processed gas will be used by Kuwait when work is complete.