Mechanical Engineering & Contracting Company (MECC), a subsidiary of the local Ali Alghanim and Sons, is the favourite to win the contract to build high pressure crude oil pipelines for Kuwait Oil Company (KOC) in the north of the country, after submitting the lowest price in a 1 June bid round.

MECC’s price of KD38.84m ($132m) beat proposals of KD44m from the Combined Group Contracting, and KD49.5m from Heavy Engineering Industries & Shipbuilding Company, both local, according to sources close to the deal.

The winning firm will build a series of six-inch carbon-steel crude oil pipelines in northern Kuwait, running from KOC’s oil field wellheads to their associated manifolds and gathering centres.

Kuwait’s northern oil fields contain an estimated 13 billion barrels of heavy crude oil reserves. KOC plans to increase Kuwait’s total production capacity to 4 million barrels a day (b/d) by 2020 from the current 3 million b/d. Heavy oil production is expected to contribute around 250,000 b/d by 2020. It will need to revamp its distribution network to deal with the 1 million b/d increase in production.