Kuwait Oil Company (KOC) is considering suspending the engineering, procurement and construction (EPC) tender to build phase one of the estimated $3bn Jurassic gas facility, according to sources with knowledge of the matter.
Kuwait's plans to build a liquefied natural gas (LNG) facility and the availability of cheap gas are cited as reasons why KOC is considering suspending the tender.
"If you're getting cheap gas, why would you want to develop this?" says a contractor, who was preparing to bid on the project. "The LNG project works out cheaper and gas is readily available in the market."
Contractors have not yet been informed of plans to revise the tender, which was announced in late August and was due in September.
Kuwaiti daily Al-Rai also reported that Kuwait Petroleum Corporation decided during a recent meeting to stop the tender for the facility and was considering a slightly amended offer or would perhaps seek "other alternatives in accordance with available technical conditions".
Kuwait National Petrochemical Company (KNPC) is planning to build an LNG facility to meet domestic demand for gas that will become operational in 2020.
MEED reported that Japan's Sumitomo Mitsui Banking Corporation had been appointed financial advisor for the LNG project.
In September, MEED reported that three joint ventures had been formed ahead of an official invitation to bid for the EPC contract to build phase one of the massive Jurassic gas facility.
The teams are understood to be:
- SK Engineering & Construction (South Korea) / Petrofac (UK)
- Samsung Engineering (South Korea) / Larsen & Toubro (India)
- Saipem (Italy) / Tecnicas Reunidas (Spain)
KOC had named seven companies that had qualified to become the main contractors on the project.
It also stipulated that the main contractor would have to choose a partner from another list of contractors and bid for the deal as part of a joint venture.
The companies that qualified to become the main contractor on the project were:
- JGC Corporation (Japan)
- Kellogg Brown & Root (US)
- SK Engineering & Construction
- Technicas Reunidas
- Samsung Engineering
- Hyundai Heavy Industries (South Korea)
The giant gas scheme planned for the Al-Ahmadi governorate is designed to produce 590 million cubic feet a day (cf/d) of gas to meet Kuwait's growing demand. The government plans to produce more than 4 billion cf/d by 2030, primarily to meet power generation requirements.
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