State-owned upstream operator Kuwait Oil Company (KOC) is preparing to cancel the tender for the phase one of Kuwait’s Jurassic Gas Facility, according to sources close to the $3.6bn project.

 “KOC has decided to cancel the project and is preparing to make an official announcement,” said one source.

 Industry insiders have blamed the cancellation on a dispute between Kuwait’s oil ministry and the national oil company Kuwait Petroleum Corporation (KPC). KOC is a subsidiary of KPC.

 “It’s not clear exactly what the problem is but it seems to be conflict between the oil minister and KPC,” said one source.

 Political problems in Kuwait could still save the project from being cancelled, according to some sources.

 Kuwait’s government is expected to resign soon. This could lead to the oil minister being changed.

 “If the oil minister disappears or is replaced then the political problems that are causing the cancellation of this project may also disappear,” said one source.

 If it is officially announced that the tender has been cancelled it is expected that KOC will rethink the project perhaps coming up with some changes before retendering.

 Three consortiums were preparing to bid on the project.

 These were:

  •  SK Engineering & Construction (South Korea) / Petrofac (UK)
  • Samsung Engineering (South Korea) / Larsen & Toubro (India)
  • Saipem (Italy) / Tecnicas Reunidas (Spain) 

The project ha a scope that includes a central processing facility (CPF), offsite facilities and a pipeline gathering system.

 The CPF will have the capacity to process 590 million standard cubic feet of gas a-day. It will be able to process 220,000 barrels of oil a day (b/d) and 1,200 tons per day of sulfur.

 The scheme is being developed to meet Kuwait’s growing gas demand. The government plans to produce more than 4 billion cf/d 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 recent political disruptions to the project phase one was scheduled to be completed in 2021.