Kuwait delays Lower Fars contract award

07 December 2014

Kuwait Oil Company says winning firm will not be announced this year

State-owned upstream operator Kuwait Oil Company (KOC) has said it will not reveal the winner of the engineering, procurement, and construction (EPC) contract for the multibillion-dollar Lower Fars Heavy Oil (LFHO) development project this year.

KOC has not given any reason for the delay.

The announcement comes days after Mohammed al-Abduljaleel, KOC’s manager of capital project planning, told the MEED Kuwait Projects Conference, held in Kuwait on 24-25 November, that the contract award would be made in December.

He said the deal would be awarded before the end of the year and would be signed by February 2015, with commissioning due to start in August 2018.

Proposals were submitted on 15 July, with the UK’s Petrofac offering the low bid of $4.3bn.

The other bidders were:

  • SK Engineering & Construction (South Korea) – $4.5bn
  • Eni Saipem (Italy) – $6bn
  • GS Engineering & Construction (South Korea) – $6.3bn

The single EPC tender is for the first phase of the project’s development and includes the construction of a steam injection facility, production facilities, a support complex, tank farms and a 270,000 barrel-a-day (b/d) pipeline to transport the heavy crude to the planned new refinery at Al-Zour in the south of Kuwait.

State upstream operator KOC first issued a tender for the phase one facilities in October 2013 and the deadline for bids saw repeated delays.

Al-Abduljaleel said phase one would produce 60,000 b/d by 2020.

Under the government’s plans, the development of heavy oil assets in Kuwait is expected to help compensate for declines in conventional oil production.

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