Japan’s JGC Corporation is the favourite to win the contract to build a new water treatment plant in the divided zone between Saudi Arabia and Kuwait after submitting the lowest bid.

At least five international engineering firms submitted prices to the Saudi/Kuwaiti Al-Khafji Joint Operations (KJO) in time for an 8 March deadline, with JGC’s price of around $155m the lowest handed in, say sources close to the project.

The deal is part of a wider scheme to boost oil and gas production in the area, which is jointly controlled by Kuwait Petroleum Corporation (KPC) and Saudi Aramco.

Other contractors that bid on the engineering, procurement and construction (EPC) deal included the South Korean firms Daelim Corporation and Hyundai Heavy Industries along with Techint of Italy and Switzerland’s ABB Lummus.

Contractors expect KJO to award the deal by the end of the third quarter of 2010.

Another EPC deal tendered by KJO at the same time as the water treatment scheme covers the offshore element of the project, at the Al-Khafji field. The contract involves the installation of new power cables, storage tanks, well facilities, and associated infrastructure.

Both schemes are part of Khafji Joint Operations’ plans to boost overall oil production in the Divided Zone from an estimated 550,000 barrels-a-day (b/d) currently to 900,000 b/d by 2030.

The company has asked engineering firms to submit bids for a major new five-year project management services contract to oversee the development of the area by 28 June.

One source close to the project says three contractors are particularly keen to bid on this deal: Australia’s WorleyParsons, the US’ Foster Wheeler and the UK’s Amec.