Kuwait upstream contract awards dive in 2011

12 January 2012

Only $2.6bn of contracts awarded compared with $11.6bn in 2010

State upstream operator Kuwait Oil Company (KOC) signed $2.6bn-worth of contracts in 2011, almost 80 per cent lower than $11.6bn it awarded in 2010, a drop largely attributed to changes in the Oil Ministry and reluctance to invest.

According to the latest data released by KOC, only $89m worth of contracts were signed in December. The company’s most productive month came early in the year, with the award of more than $650m in deals in January. These included two major oil field service contracts with the US’ Western Atlas and Dubai-based Halliburton worth more than $378m.

Since then, few major contracts have been awarded, particularly in the engineering, procurement and construction (EPC) market. The last major deal to be approved by the country’s Central Tenders Committee (CTC), which oversees all publicly tendered schemes, came in August for a water injection facility at the Wara formation of the giant Burgan oil field. However, the $545m contract is yet to be officially signed with South Korea’s GS Engineering & Construction.

As many as 14 proposals are still under evaluation with an estimated total value of almost $350m. This includes a $200-plus deal to provide suck-rod pumping services. KOC is also yet to decide on a contractor for the long awaited clean up of Kuwait’s oil lakes. Twelve firms submitted bids in August, with Spanish firm Hera emerging as the frontrunner to win the deal with a low bid of $151m. A project management consultancy tender for the environmental remediation scheme is expected to be launched in February (MEED 17:9:11).

KOC has a raft of more than 92 tenders, which it plans to issue in 2012. Of interest to EPC firms will be a number of pilot trials, for a 5MW photovoltaic power plant and an integrated solar power plant, which will produce power and steam for enhanced oil recovery. KOC also plans a number of effluent water disposal systems at its network of gathering centres.

In late 2010, KOC’s parent company, Kuwait Petroleum Corporation (KPC) announced that it planned to spend as much as $340bn over the coming two decades, aiming to increase the number of rigs operating in the country and pushing ahead with enhanced oil recovery (EOR) schemes, as well as increasing domestic gas production. KPC also plans to raise oil production capacity to 4 million barrels a day (b/d) by 2020.

The plans were have been reiterated by the Kuwait’s new Oil Minister, Mohammed al-Baseeri who was appointed in May and oversees a sector with spending plans of more than $90bn over the next five years.

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