Kuwaiti contractor Spetco has been confirmed as the lowest bidder for Kuwait Oil Company’s (KOC) Jurassic production facilities (JPF) projects known as JPF-4 and JPF-5, according to official data published by the country’s Central Agency for Public Tenders (CAPT).
The official numbers have been published days after MEED exclusively revealed the prices that were submitted by contractors.
While Spetco has submitted the lowest price for both projects, it is unlikely that it will be awarded both contracts by KOC. Kuwaiti law stipulates that a contractor can only be allowed to win a single contract in a project containing more than one package.
Currently, the Chinese oil field services company Jereh, which has an agreement with the local agent Napco, is the second-lowest bidder on both JPF-4 and JPF-5 and it looks likely that it could be awarded one of the contracts.
Bids for the project were submitted on 4 April by five contractors. The full list of bidders and their prices in order of value are:
- JPF-4: $489,450,000
- JPF-5: $489,450,000
Jereh (China) with Napco (Kuwait)
- JPF-4: $490,650,000
- JPF-5: $490,650,000
- JPF-4: $529,304,524
- JPF-5: $529,213,154
Al-Khorayef Group (Saudi Arabia)
- JPF-4: $530,129,758
- JPF-5: $530,129,758
- JPF-4: $546,153,657
- JPF-5: $549,173,528
South Korea’s Samsung Engineering, which was earlier bidding for both JPF-4 and JPF-5, eventually dropped out of the race. A company spokesperson declined to comment when approached by MEED on the matter.
Jurassic production facilities
The two main contracts for the JPF-4 and JPF-5 projects are estimated to have a total value of more than $1bn.
The facility known as JPF-4 is due to be located close to the Sabriyah field in the north of Kuwait and JPF-5 will be located less than 10km east of JPF-4.
Both facilities will be used to conduct testing, processing, treating and handling of wet and sour hydrocarbon well fluids from multiple oil and gas fields.
These include Raudhatain, Sabriyah, Northwest Raudhatain, Umm-Niqa, Dhabi, Bahra and the fields of Marrat and Najmah-Sarjelu, as well as other formations located in the Jurassic fields.
Both projects are onshore surface production facilities and will be implemented on a build-own-operate (BOO) basis by a contractor, with an option for KOC to buy them back at a future date.
The facilities are due to be built with the capacity to produce 50,000 barrels per day (bpd) of treated sweet crude (Jurassic light oil with 40°- 50° American Petroleum Institute (API) gravity) and 150 million standard cubic feet (Mscf) a day of sweet and dehydrated rich gas.
They will both include a produced-water treatment unit and a sulphur recovery unit, as well as associated utilities and supporting systems.
Bidders have been told that the execution stage of services for each facility will total 780 calendar days.
This includes 720 days for design and engineering, project management, supply and procurement, construction, testing and mechanical completion of each facility.
Under the contracts, commissioning, stabilisation and successful performance testing of the facility should be completed within 60 calendar days of the mechanical completion of the facility.
The winners of the contracts will then operate and maintain the facilities for five years.
Ten companies attended the pre-tender meeting for the JPF-4 and JPF-5 projects, which was held on 5 October 2020.
It is understood that a total of 11 companies originally prequalified to bid on the projects:
- Al-Khorayef Group (Saudi Arabia)
- Black Cat (Qatar)
- Daewoo Engineering & Construction (South Korea)
- Gofsco (Kuwait)
- JGC Corporation (Japan)
- KBR (US)
- Petrofac (UK)
- Samsung Engineering (South Korea)
- Schlumberger (US)
- Sinopec (China)
- Spetco (Kuwait)
Several other companies prequalified to bid after the first list of prequalified bidders was published.
It is worth noting that despite not being on the original list of prequalified bidders, both NBTC and Napco submitted bids for the contracts on 4 April.
JPF tendering process
KOC has resorted to the mumarasa system for the tendering process for the JPF projects.
The system operates as a reverse auction with several rounds. Companies are required to lower their prices or keep the same price for each round, and all of the prices are revealed to the bidders after every round. As the bids get lower, bidders drop out until one company remains for each contract.
The bid deadline for JPF-4 and JPF-5 was extended a number of times before bids were submitted on 4 April. Previous bid deadlines included 26 January, 28 February, 7 March and 21 March.
KOC originally released the tender documents for the two projects on 13 September last year, with a bid deadline of 22 December. It is understood that disruption caused by the Covid-19 pandemic is partly to blame for the delay in the tendering schedule.
There was also a delay in March related to issues at the CAPT, according to sources.
Travel restrictions designed to prevent the spread of the virus have made it harder for contractors to send in experts to look at project sites before they submit their bids.
KOC was originally expected to tender the JPF-4 and JPF-5 projects in the second half of 2018.
Three other Jurassic production facilities contracts have already been awarded by the state upstream operator.
Kuwait is tapping the Jurassic carbonate reservoirs in the north of the country to meet soaring gas consumption.
KOC started gas production from its Jurassic sour gas field in May 2008 with the commissioning of the upstream project known as early production facility 50.
The Jurassic reservoirs contain a variety of hydrocarbons ranging from oil to gas condensate with sour gas.
In January, MEED revealed that JPF-3 in the West Raudhatain field had been fully commissioned.
The $377m contract for the project was awarded by KOC to Spetco in July 2016.
In March, Kuwait-based Combined Group Contracting Company (CGCC) announced that it had been awarded a $138.4m contract for external works for Jurassic production facilities in Kuwait’s northern regions.
The external works package relates to work on JPF-4 and JPF-5 projects in north Kuwait.
This article is published by MEED, the world’s leading source of business intelligence about the Middle East. MEED provides exclusive news, data and analysis on the Middle East every day. For access to MEED’s Middle East business intelligence, subscribe here.