Petrofac joins Kharafi for $1.5bn Kuwait gas scheme

10 October 2012

UK firm takes over from Italy’s Saipem for Jurassic gas subcontract

The UK’s Petrofac has been appointed by Kuwait’s Kharafi National as its new subcontractor for the estimated $1.5bn Jurassic gas project in the north of Kuwait.

The contract had originally been awarded to Italy’s Saipem in 2011, but this has now has been terminated, according to a source close to the project.

The second phase of the north Kuwait early production facilities (EPF-2) was awarded to Kharafi National in late 2010, with the aim of producing 100,000 barrels a day (b/d) of wet sour crude oil and up to 510 million cubic feet a day (cf/d) of gas.

A kick-off meeting between Kharafi National, state-upstream operator Kuwait Oil Company (KOC) and the new engineering, procurement and construction (EPC) conrtractor Petrofac was held on 4 October, says the source.

Petrofac was recently awarded a $200m contract by KOC to build three new substation buildings and lay buried cable to connect them to the electrical submersible distribution system (ESPS) network in the north of Kuwait.

Planned for completion in 2013, the EPF-2 project has been slow to move ahead. In its 2011 annual report, Saipem only said it had started “engineering work” for the project, which would include the construction and commissioning of an oil and gas treatment facility for the Jurassic field located in the north of Kuwait, as well the installation of the gathering system and pipelines and the construction of a sulphur granulation plant.

A spokesman for Kharafi National told MEED the project is proceeding, saying the “procurement of major equipment and commencement of physical work at the project site is quite imminent”.

Saipem could not be reached for a comment, while Petrofac declined to discuss its role in the deal.

With Kuwait now importing gas to meet its power generation needs, the long delayed gas deal is one of KOC’s most important projects. But it continues to suffer long delays. The initial award to Kharafi in October 2011, came nearly a year after the company had submitted its bid and emerged as the lowest priced bidder.

The project is notable for its use of the build-own-transfer (BOT) contracting model, where the plants will be owned by the contractor for a period of five years, before being handed over to KOC.

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