Khafji Joint Operations opens commercial bids for $600m upgrade work

28 November 2011

Neutral Zone oil operator close to making a decision on onshore and offshore facilities

The Saudi Arabia/Kuwait joint venture Khafji Joint Operations (KJO) has opened the bids for both the technical and commercial bids for its onshore and offshore upgrade project with a decision on a winning bidder expected to be made quickly.

KJO has already evaluated the technical bids for the engineering, procurement and construction (EPC) contract, and commercial bids were opened on 29 November at a meeting at the Khafji headquarters. There has been no indication yet who the frontrunners are for the project.

“[KJO] has managed to keep a lid on this project and as it stands all of the contractors have no idea who is the favourite to win,” says a contracting source familiar with the deal. “This should change after the commercial bids are opened.”

Both the onshore and the offshore packages are worth around $600m in total and cover a full upgrade of the upstream facilities that will include capturing the flared gas and processing it for industrial use. For the onshore package, work includes the construction of a crude and gas treatment plant, gas and natural gas liquids (NGL) collection and distribution facilities, with associated onshore gas facilities.

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.

At least seven contractors were intending to submit bids for both KJO packages (MEED 6:5:11). The work is expected to last 36 months, with completion due for the end of 2014.

The companies looking to bid include:

  • Daelim (South Korea) – onshore package
  • GS Engineering & Construction (South Korea) – onshore package
  • Hyundai Heavy Industries (South Korea) – both packages
  • J Ray McDermott (US) – offshore package
  • Larsen & Toubro (India) – both packages
  • Petrofac (UK) – both packages
  • Saipem (Italy) – both packages
  • Samsung Engineering (South Korea) – both packages
  • Sinopec (China) – onshore package
  • SNC Lavalin (Canada) – both packages
  • Techint (Italy) – onshore package
  • Technip (France) – both packages
  • Intecsa Industrial/Initec Energia (Spain) – onshore package

KJO is responsible for oil operations in the Neutral Zone, an area between Saudi Arabia and Kuwait where the border is not properly defined. The company is a joint venture of Saudi Aramco subsidiary Aramco Gulf Operations and the Kuwait Gulf Oil Company.

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