Kuwait’s Central Agency for Public Tenders has published its decision to cancel the tender of the $3.6bn first phase of Kuwait Oil Company’s (KOC) Jurassic Gas Facility project.
KOC is the upstream subsidiary of the national oil company Kuwait Petroleum Corporation.
In the published minutes from a meeting that was held on 30 October 2017 the tenders authority said that the cancellation was “as per the guidance of the Board of Directors of KPC and the result of a review and amendments to capital budgets for KOC projects.
The minutes say that the request for the cancellation was approved by a majority vote.
The cancellation of phase one of the Jurassic Gas Facility project is a major setback for the engineering, procurement, and construction (EPC) companies that were preparing to bid.
Though the project is expected to be retendered in some form – they could have a long time to wait.
When the tender of the contract for feed pipelines for Kuwait’s Al-Zour New Refinery Project was cancelled in 2014 the contract did not end up being awarded until August 2017.
“The timeframe for progress on this project is very uncertain now,” said one industry source. “We could see the contract retendered with minor changes within a couple of months – or it could be literally years before this is tendered again.”
The formal announcement of the cancellation comes one week after MEED first revealed that Kuwait was rethinking the Jurassic Gas project on 24 October 2017.
It is still unclear exactly why the tender has been cancelled.
Three consortiums were preparing to bid on the project:
- 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 standard cubic feet of gas a-day. It would have been able to process 220,000 barrels of oil a day (b/d) and 1,200 tons per 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 the 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 of the project was scheduled to be completed in 2021.