State upstream operator Kuwait Oil Company (KOC) is planning to tender three contracts for the first phase of its heavy oil development, a landmark scheme worth an estimated $7bn.

The first phase of the development involves the construction of plant buildings, pipelines and flowlines, which will be awarded on a lump-sum turn-key (LSTK) basis. KOC could invite bids as early as 2013, sources close to the project tell MEED.

Kuwait oil output targets
Year Heavy oil (mb/d) Other (mb/d) Total (mb/d)
2009 0.0 2.8 2,784,000
2015f 0.3 3.5 3,500,000
2020f 0.5 4.0 4,000,000
f=Forecast. mb/d=millions barrels a day. Source: MEED

To enhance the bidding process, the list of prequalified contractors will be supplemented by a heavy oil consultancy firm for the engineering and commissioning phase, although these have not yet been prequalified.

The scope of work covers three major packages. The first includes a central processing facility (CPF), which will house a water treatment plant and hazardous waste disposal plant for effluent water.

The second package covers export facilities, which include an oil export pipeline to the South tank farm at Al-Ahmadi, as well as infield pipelines. It also covers a 110-kilometre water supply pipeline from the Sulaibiya wastewater treatment plant on the Gulf to the CPF. The final package covers the construction of a production support complex.

The operations and maintenance of the plants and equipment does not fall within the scope of the LSTK contract and will be handled separately.

The heavy oil development will eventually require the drilling of 900 wells, producing approximately 60,000 barrels a day (b/d), which would be targeted for the stalled Al-Zour refinery, which state-refiner Kuwait National Petroleum Company (KNPC) hopes to restart.

In 2007, KOC launched the Lower Fars Test Project (LFTP), a milestone development in the Gulf’s oil industry exploring the potential of removing solids, primarily sand, from heavy oil in the northern Ratqa field, the first attempt to use the technique in the region.

The pilot study was meant to be the precursor to a substantial ramp-up of heavy oil production. Kuwait signed a preliminary agreement with US oil major ExxonMobil in 2007 to develop its heavy oil assets.

In October 2010, French oil major Total signed a technical services agreement worth $27.6m with KOC to help develop its heavy crude oil deposits, which total some 13 billion barrels.

KOC initially planned for heavy oil production to increase to 250,000 b/d by 2015 and to constitute 900,000 b/d of its 4 million-b/d 2020 production target. It has now revised the figure down to between 250,000 to 270,000 b/d.