Kuwait reissues Jurassic gas tenders

11 January 2016

Move comes after Schlumberger submitted low bids for contracts totalling $4.3bn

State-owned upstream operator Kuwait Oil Company (KOC) has reissued the tender for two of the three contracts that form part of the second phase of Kuwait’s non-associated gas production programme.

The packages that have been reissued are the West Raudhatain and East Raudhatain packages.

It is unknown whether KOC is planning to reissue the Umm Niqa and Sabriya package.

Even if KOC decides not to reissue the Umm Niqa and Sabriya package it may wait until bids are submittted on the reissued packages before it awards the contract, according to industry sources.









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Usually when they have these multiple package tenders Kuwait likes to have all the prices in front of them so they can award based on the lowest cost to them while complying with the ’one contract award per bidder’ rule,” said one industry source.

In a statement issued on 10 January, KOC said the new deadline for bids on the two reissued contracts is 23 February.

The reissued tender is open to the same 19 companies that prequalified for the original tender.

The three contracts that form the second phase of Kuwait’s non-associated gas production programme involve the production of about 120,000 barrels a day (b/d) of wet crude and more than 300 million cubic feet a day (cf/d) of sour gas from the Raudhatain, Sabriya, Northeast Raudhatain, Umm Niqa and Dhabi fields in north Kuwait.

Only three companies out of the 19 prequalifiers submitted prices during the original tender process.

In November US-based Schlumberger was announced as the low bidder on all three contracts, with the low bids totalling more than $4.3bn.

Schlumberger submitted an offer of KD421m ($1.4bn) each for the identical West Raudhatain and East Raudhatain packages, and KD475m for the Umm Niqa and Sabriya package. Saudi Arabia’s Al-Khorayef Commercial bid KD523m and KD592m for the same three packages respectively, while the local Safwan Petroleum Technologies Company (Spetco) offered KD489m and KD615m.

Industry sources believe the reissue of the tender may be due to the low number of bidders.

“I thought they were moving on to the next phase of the Jurassic project, but obviously they haven’t got this one up and running properly,” says one source.

Each deal involves the build and five-year operation and maintenance of gasoil separation and treatment systems, export pipelines, effluent water treatment facilities, and vapour gas recovery compression systems. The Umm Niqa package also has a sulphur recovery unit, which accounts for its higher cost.

The US’ Fluor conducted the project’s front-end engineering and design (feed).

A $1.56bn contract to develop reserves in the Jurassic gas fields was awarded to the local Kharafi National in 2010. The project aimed to produce 100,000 b/d of wet sour crude and up to 510 million cf/d of gas, along with a sulphur granulation plant. It used a build-operate-transfer (BOT) contracting model, where the contractor would provide the financing for the construction.

After appointing Italy’s Saipem as subcontractor in 2011, then replacing it with the UK’s Petrofac in 2012, the project stalled when Kharafi National failed to secure the financing it needed to proceed with the scheme.


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