Kuwait’s Jurassic gas project faces dramatic changes

26 November 2017
Contractors say Kuwait is considering relaunching scheme as an early production facility

Contractors are expecting a long wait before the relaunch of the $3.6bn first phase of Kuwait Oil Company’s (KOC's) Jurassic gas facility project, according to industry sources.

They are also expecting dramatic changes to the scheme when it is eventually relaunched.

According to industry sources, KOC has discussed the possibility of relaunching the project under an early production facility contract, not an engineering, procurement and construction (EPC) deal.

Kuwait’s early production facility contracts are similar to build-operate-transfer (BOT) deals, which allow the main contractor to recover costs by operating the facility before it is transferred to a public company.

“This kind of project would take a long time to relaunch under normal circumstances,” says one source. “But due to the current political problems in the country, it is likely to see very slow progress.”

Kuwait’s government formally resigned at the end of October, something that is likely to slow down all projects in the country that are not yet under execution.

Earlier this month, the country's Central Agency for Public Tenders published its decision to cancel the tender of the first phase of the Jurassic gas facility scheme in the minutes from a meeting that was held on 30 October.

The tenders authority said the cancellation was “as per the guidance of the board of directors of Kuwait Petroleum Corporation (KPC) and the result of a review and amendments to capital budgets for KOC projects.”

Three consortiums were preparing to bid on the scheme:

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

The project’s scope included a central processing facility (CPF), offsite facilities and a pipeline gathering system.

The CPF was due to have the capacity to process 590 million cubic feet a day (cf/d) of gas. It would have been able to process 220,000 barrels a day (b/d) of oil and 1,200 tonnes a day of sulphur.

The scheme was being developed to meet Kuwait’s growing gas demand and its cancellation could well be a setback to government plans to produce more than 4 billion cf/d of natural gas 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 cancellation of the tender, the first phase was scheduled to be completed in 2021.

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