Riyadh and Kuwait expand Divided Zone oil facilities

28 August 2009

Joint venture invites contractors to prequalify for bidding on onshore processing upgrade by 28 September

Saudi Arabia and Kuwait are launching a scheme to expand oil processing facilities in the Divided Zone between the two countries, in advance of increases in production.

Khafji Joint Operations (KJO) is inviting contractors to prequalify for a five-year project management deal to oversee the project.

KJO is a 50:50 joint venture of Aramco Gulf Operations, a division of state-run Saudi Aramco, and Kuwait Gulf Oil Company, a subsidiary of state-run Kuwait Petroleum Corporation (KPC).

The contract covers the expansion of a water treatment plant and crude oil onshore facilities, and construction of diesel tanks and a gas and natural gas liquids export control system for output from the Al-Khafji field. It also covers associated onshore and offshore gas facilities for the Hout field.

The Saudi-Kuwaiti joint venture issued the tender on 28 July, and requires companies to prequalify by 28 September. The joint venture will issue an invitation to bid in October and expects to award the contract in the first quarter of 2010.

One source close to the project says just three contractors plan to submit prequalification documents: Australia’s WorleyParsons, the US’ Foster Wheeler and the UK’s Amec.

The joint venture will tender the engineering, procurement and construction (EPC) portion of the scheme next year.

The offshore Al-Khafji field, which lies 40 kilometres east of Al-Khafji city in Saudi Arabia, currently produces about 300,000 barrels a day (b/d) of oil. KJO plans to increase this to 350,000 b/d in the coming years. Saudi Arabia and Kuwait hope to jointly increase the divided zone’s overall production to 900,000 b/d by 2030 from its current level of about 538,000 b/d.

In March 2006, WorleyParsons won an engineering services deal covering the expansion and upgrade of oil and gas facilities at the Al-Khafji field.

In November 2008, Saudi Arabian Chevron, a subsidiary of the US oil major, approached contractors to carry out a front-end engineering and design (Feed) study to boost output from the onshore Wafra, Umm Gudair and South Fuwaris oil fields in the Divided Zone by 200,000 b/d (MEED 23:12:08).

Saudi Arabian Chevron has yet to release an invitation to bid for the Feed study, however.

The firm wants a contractor to carry out the Feed on a reimbursable, fixed-price basis.

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