Commentary
Wil Crisp
Oil & gas reporter

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Contractors in Kuwait expect the regional conflict and disruption to shipping to worsen the country’s existing oil and gas tendering problems, causing long-term disruption in the sector.

In the months prior to the US and Israel attacking Iran on 28 February, contract tenders worth an estimated $9.1bn were cancelled after bids came in above the projects’ allocated budgets.

Contractors largely blamed the cancellations on long delays to tender processes after budgets had been set.

The delays, which often extended for several years, meant inflation drove up the cost of materials and labour, making it almost impossible for contractors to submit bids within the original budgets.

One industry source said: “The reason all of these contracts were cancelled was because the tender processes for large projects had started moving again after stalling for a long time.

“Bids came in and unfortunately they were over budget. It was then expected that tender processes would restart and these projects would ultimately be awarded – but now the war means that Kuwait is facing a whole new wave of project delays and nobody knows when it is going to end.”

War impact

Many industry insiders believe delays caused by the war and the closure of the Strait of Hormuz will once again seriously disrupt projects, just as many stakeholders believed the country was about to see an uptick in project progress.

One source said: “Bid bonds are going to have to be renewed and some bidders might just use that as an opportunity to drop out of the bidding process.

“It’s also possible that work that has already been done, like feasibility studies, will no longer be relevant and will have to be repeated.”

2025 rebound

Last year, Kuwait recorded its highest total annual value for oil, gas and chemicals contract awards since 2017, according to data from regional project tracker MEED Projects.

A total of 19 contract awards with a combined value of $1.9bn were awarded.

This was more than four times the value of contract awards across the same sectors in 2024, when awards were worth just $436m.

It was also above the $1.7bn peak recorded in 2021, but it remained far lower than the values seen in 2014-17, when several large-scale, multibillion-dollar projects were awarded in the country.

The surge in the value of contract awards came after Kuwait’s emir indefinitely dissolved parliament and suspended some of the country’s constitutional articles in May 2024.

Prior to the suspension of parliament, Kuwait suffered from very low levels of project awards for several years amid political gridlock and infighting between the cabinet and parliament.

This meant important decisions about projects could not be made – a major obstacle to the progression of strategic oil projects.

Forward outlook

With several major oil and gas projects under development in late 2025 and early 2026, some expected 2026 to record a far higher volume of oil and gas contract awards than 2025.

Projects expected to be tendered – and potentially awarded – this year included a $3.3bn onshore production facility due to be developed next to the Al-Zour refinery.

This project has already been delayed and put on hold as a result of fallout from the US and Israel’s conflict with Iran.

Had it been awarded, it would have been the biggest single oil and gas contract award in Kuwait in more than 10 years.

Now, as a result of the conflict, many of the large tenders expected to take place this year are likely to be significantly delayed.

One source said: “Right now, everyone in the oil and gas sector is waiting for some sort of sign of improving stability before they make a decision and there’s a lot of uncertainty.

“The state-owned oil companies aren’t communicating with contractors like they normally do and the price of a lot of materials has increased dramatically.”

Even if the standoff between the US and Iran over reopening the Strait of Hormuz is resolved in the near future, it is likely to take months or years before Kuwait’s oil and gas project market regains the momentum it had at the beginning of 2026.

Given the lack of flexibility within Kuwait’s existing tendering system, delays can easily lead to tenders being cancelled, and the conflict’s inflationary impact will make it even harder for contractors to meet budgets set before the latest disruption.