State-owned upstream operator Kuwait Oil Company (KOC) is discussing retendering its $3.6bn Jurassic gas facility as three or four smaller packages, according to industry sources.

KOC is planning to tender the packages as early production facility (EPF) contracts, rather than an engineering, procurement and construction (EPC) deal.

“KOC is now discussing retendering the project as three or four EPF packages, but nothing has been finalised yet,” says one source, who was briefed by KOC officials.

Kuwait’s EPF contracts are similar to build-operate-transfer (BOT) deals, which allow the main contractor to recover costs by operating the facility before it is transferred to a public company.

The exact scope and value of the packages has not yet been decided.

In December 2017, Kuwait’s Central Agency for Public Tenders published its decision to cancel the tender of the first phase of the Jurassic gas facility scheme in the minutes from a meeting held on 30 October.

The tenders authority said the cancellation was “as per the guidance of the board of directors of Kuwait Petroleum Corporation (KPC), and the result of a review and amendments to capital budgets for KOC projects.”

Three consortiums were preparing to bid on the scheme:

• SK Engineering & Construction (South Korea)/Petrofac (UK)
• Samsung Engineering (South Korea)/Larsen & Toubro (India)
• Saipem (Italy)/Tecnicas Reunidas (Spain)

The project’s scope included a central processing facility (CPF), offsite facilities and a pipeline gathering system.

The CPF was due to have the capacity to process 590 million cubic feet a day (cf/d) of gas, 220,000 barrels a day of oil and 1,200 tonnes a day of sulphur.

The scheme was being developed to meet Kuwait’s growing gas demand and its cancellation could well be a setback to government plans to produce more than 4 billion cf/d of natural gas by 2030, primarily to meet power generation requirements.

Kuwait currently burns a large volume of oil products to meet its utility needs.

In December 2016, KOC awarded US-based Black & Veatch a licensing technology and related services contract for sulphur recovery and acid gas removal units to support natural gas processing at the first phase of the Jurassic natural gas facility.

Prior to the cancellation of the tender, the first phase was scheduled to be completed in 2021.