Kuwait set to be biggest GCC oil and gas spender in 2014

14 January 2014

Large contracts on refineries and heavy oil should see Kuwait overtake the UAE this year

Kuwait is set to overtake the UAE as the Gulf’s biggest spender on oil and gas projects this year as it prepares to award major contracts on two refineries and a heavy oil development.

In terms of value, the UAE awarded more engineering, procurement and construction (EPC) contracts on oil and gas projects than all other five GCC countries combined in 2013.

The total value of the awards was $11.1bn, according to regional projects tracker MEED Projects, with Oman a distant second with $2.9bn and Saudi Arabia with $2.7bn.

The market was dominated by awards on Abu Dhabi’s ambitious offshore oil developments on the Upper Zakum, Satah al-Razboot (Sarb) and Umm al-Lulu fields. The UAE market is experiencing another strong year in 2014 with major contracts expected on the Fujairah refinery, Nasr offshore field development and North East Bab onshore field developments.

But the biggest spender in 2014 is forecast to be Kuwait, which has been a relatively sleepy market in recent years for such a key oil producer.

Kuwait National Oil Company (KNOC) received bids on its $14bn Clean Fuels Project (CFP) at the end of 2013 with Japanese, US and UK-led consortiums emerging as the low bidders for the main three packages.

The deals are expected to be signed in the first quarter of 2014 and the sums involved represent some of the largest packages ever awarded to contractors in the region. The $4.8bn package eclipses even the $3.7bn deal handed to Petrofac and Daewoo E&C’s by Abu Dhabi for the development of the offshore Upper Zakum field.

The scheme involves upgrades and expansions of the Mina al-Ahmadi and Mina Abdullah refineries to increase their combined capacity to 800,000 barrels a day (b/d), from 736,000 b/d currently.

Later in the year, Kuwait could award the main contracts on the long-delayed $15bn New Refinery Project (NRP). The NRP has been in the planning stages since 2004, but there is real optimism that it will begin to move in the next 12 months.

Contract awards are also set to pick up in Oman in 2014 as the sultanate prepares to implement several key megaprojects in its oil, gas and petrochemicals sectors.

Major awards expected in 2014 include several packages on the BP-led $16bn Khazzan tight gas development with the large central processing facility (CPF) package due to be awarded in the coming months.

Construction was also due to start on a new refinery in the central port of Duqm, but the front-end engineering and design (feed) phase is still to be completed, which could push the project back further.

In Qatar, significant amounts will be spent by Occidental Petroleum on the development of the offshore Idd el Shargi North Dome Expansion.

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