The low bid for the contract to build a desalter train for Kuwait Oil Company (KOC) has come in 20 per cent over the project’s budget, according to industry sources.

The higher than expected prices mean that it is likely the project will be retendered or cancelled.

“Officially KOC is still evaluating the bids,” said one source. “The fact that all of the bids came in much higher than expected has put it in a difficult position. The most likely outcome is that it will retender or cancel the project.”

Abu Dhabi-based NPCC has submitted the lowest bid – KD70m ($232m) – for the contract to build a desalter train.

Five companies submitted commercial bids for the project out of 15 that prequalified.

KOC plans to install the desalter train in four separate portions at the gathering centres known as GC-09, GC-10, GC-19 and GC-21. The contract uses the engineering, procurement and construction (EPC) model.

Desalter units remove salts including calcium, sodium and magnesium chloride that are dissolved in the water mixed with crude oil.

If these compounds are not removed from the oil, it can cause problems during the refining process, including the formation of corrosive hydrochloric acid and deposits that can block heat exchangers.

Expectations of a retender for the desalter project increased after KOC recently decided to retender another contract to build a gas sweetening facility in West Kuwait.

Sources say the gas sweetening facility was retendered because bids came in above the project’s budget value, but KOC hasn’t officially provided contractors with a reason why the project was retendered.

Kuwait-based Spetco International Petroleum had submitted the lowest bid for that project, with a price of KD84m ($277m), and it was expected that the contract would be signed in September.