Kuwait signs $1.9bn of upstream contracts in December

05 January 2011

State-operator Kuwait Oil Company awards $11.6bn in 2010

Kuwait Oil Company (KOC) awarded a total of more than $1.9bn of contracts in December, bringing its total for 2010 to $11.6bn, according to data released by the state-upstream operator.

The largest contract, at $1.56bn, was signed by the local Kharafi National on 6 December for a deal to build early production facilities at Kuwait’s north oil fields. Italian engineering and construction firm, Saipem will build and commission the facilities Kharafi National.

The project is part of Kuwait’s plan to increase gas production, with up to 510 million cubic feet a day (cf/d) of associated gas and 150,000 barrels a day (b/d) of wet sour crude.

The Jurassic gas fields deal was expected to raise gas production to 600 million cf/d by 2013. These temporary facilities are used to test the viability of production, generally over five years. If viable, KOC will build permanent facilities (MEED 22:10:10).

The second-largest deal, worth $1.44bn went to South Korea’s Hyundai Engineering & Construction in June for the installation of low sulphur fuel oil and gasoil pipelines from Mina al-Ahmadi to Sabiya and Doha power stations (MEED 30:4:10)

Saipem also won a $929m deal in June to build a new booster station in west Kuwait.

In 2010, KOC awarded a total of nine contracts worth almost $700m for deep drilling and workover rigs, which are used to maintain oil reservoir pressure. While most contracts went to local firms, but the largest deal at $245m went to China’s Sinopec in February.

Kuwait plans to raise oil production to 4 million b/d by 2020, from about 2.5 million b/d currently. The bulk of the increase will come from KOC at 3.65 million b/d, including 250,000-270,000 b/d of heavy crude oil from its northern fields. The remainder will come from Kuwait Gulf Oil Company’s operations in the divided zone with Saudi Arabia.

Contractors can expect to see further large contracts from KOC in 2011 focusing on maintaining production and revamping the country’s pipeline infrastructure. In October 2010, the company tendered an estimated $500m water injection contract to help maintain production at the Burgan oilfield in the southeast. Bids will be submitted in March.

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