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February 23, 2022

Technip back in contention for Kuwait oil project

France's Technip was accepted back into the bidding process for a PMC contract with Kuwait Oil Company, something that has proven controversial.

By MEED   

France’s Technip is back in contention for a major project management consultancy (PMC) contract with Kuwait Oil Company (KOC), according to industry sources.

The decision to readmit Technip into the bidding process has proved controversial among stakeholders in Kuwait’s oil and gas sector due to concerns it could spark a new wave of project delays.

In November, MEED reported that the Sydney-based engineering company Worley had submitted the lowest bid to state-owned upstream operator KOC for a contract covering front-end engineering and design (feed), project management and associated services for KOC’s major projects.

The contract covers a period of three to five years.

Bids were initially accepted from three companies while two other prequalified companies had their bids rejected.

Bids were submitted by:

  • KBR (US) KD88.41m ($292m)
  • Wood Group (UK) KD83.46m
  • Worley (Australia) KD81.3m

The bids submitted by US-based Fluor Corporation and Technip were rejected.

Both Fluor and Technip had their bids rejected for the same reason, according to industry sources.

“When both companies submitted bids, they failed to submit a bid bond of the correct value,” said one source.

“The required value of the bid bond changed part of the way through the tender process.

“For some reason, both Fluor and Technip submitted a bid bond in line with the original tender documents, not the updated amount.”

KOC’s acceptance of Technip back into the bidding process potentially opens the door to Fluor being readmitted into the bidding process at a later date, according to sources.

Already, delays to the award of the contract have caused significant disruption in Kuwait’s oil and gas projects market, sources said.

Once the PMC contract is signed, it is believed it could generate increased momentum for a broad range of upstream projects.

When the contract was originally tendered in February, KOC released a list of current and future projects that the consultant is likely to be involved in.

At the time, it said these projects were in the construction phase:

  • EF/1669: New refinery project – KOC pipelines and facilities
  • EF/1761: Effluent water injection plant phase two NK
  • EF/1852: Lower Fars heavy oil development programme phase one (60,000 BOPD)
  • EF/1852A: Brine pumping facility at Sulaibiya water treatment plant detail engineering design
  • EF/1855: Construction of South Ratqa A 72MW substation and associated 132kV overhead (OH) lines
  • EF/1901: Construction of new gathering centre, GC-29 in North Kuwait
  • EF/1902: Construction of new gathering centre, GC-30 in North Kuwait
  • EF/1903: Construction of new gathering centre, GC-31 in North Kuwait
  • EF/1906: Construction of Sabriyah C, 72MW substation and132kV OH lines
  • EF/1907: Construction of Raudhtain E, 72MW substation and 132kV OH lines
  • EF/1920: New water centre at NK
  • EF/1927: Headers and PL NK GCs
  • EF/1928: New 48 crude transit line from NK to CMM
  • EF/1931: New gathering centre 32 (GC-32)
  • EF/1943: New strategic gas export pipeline from NK to MAA
  • EF/1945: Train three of Wara pressure maintenance project
  • EF/1992: Enhancement and third train at BS-160 project
  • EF/1952: Kuwait National Petroleum Research Centre

The projects in the ‘contract action’ phase were:

  • EF/1992: Enhancement and third train at BS-160 project
  • EF/1985 and EF/1985A: Four new 132kV substations in NK
  • EF/2017: Fuel supply system for Nuwaiseeb power station
  • These were the projects in the feed phase:
  • EF/2030: New effluent water treatment and injection plant at North Kuwait (phase three)
  • EF/2034: New crude oil tanks and JLO blend/JLO proper export facilities at NTF
  • EF/2046: KOC office complex two
  • EF/2047: New Kuwait Integrated Petroleum Industries Company (Kipic) main office in Ahmadi
  • EF/2048: New gathering centre (GC-34) in North Kuwait
  • EF/2049: Free water knock-out facilities in North Kuwait

Kuwait is planning an increase in oil and gas project activity over 2022.

Kuwait has struggled to maintain oil and gas sector activity in 2020 and 2021 amid logistical problems related to the Covid-19 pandemic and intense domestic political divisions.

On 23 November, Kuwait’s prime minister was tasked with forming a government for the third time in one year. In December, the government was sworn in.

Prime Minister Sabah al-Khalid al-Sabah was instructed to form a governmental cabinet by the emir.

The first government resigned in January 2021 and the next took office in March with the task of addressing economic challenges and the Covid-19 pandemic, before resigning in November.

Decision-making, including reforms to buoy Kuwait’s economy, has stalled this year as opposition parties have blocked cabinet resolutions in parliament.

Kuwait’s political divisions were accentuated by the death in 2020 of the former emir, Sheikh Sabah al-Ahmad al-Sabah. The late emir had ruled the country since 2006.

On 17 February, Kuwait announced that the new government’s interior and defence ministers had resigned after they protested the manner of parliamentary questioning of ministers.

A royal decree said the resignations of the two ministers, both members of the royal ruling family, had been accepted.

Interior Minister Sheikh Ahmed Mansour al-Ahmed al-Sabah was replaced in a caretaker role by Oil Minister Mohammed al-Fares, government spokesman Tariq al-Mazram said.

Defence Minister Sheikh Hamad Jaber al-Ali al-Sabah was replaced by Sheikh Ahmed Nasser al-Mohammed al-Sabah, the foreign minister and now also acting defence minister.

The two ministers quit after parliament questioned the foreign minister, also part of the royal family, over corruption claims and alleged misuse of public funds.

While the foreign minister survived a no-confidence vote on 16 February, Sheikh Hamad and Sheikh Ahmed said the lengthy grilling was an abuse of power.

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.

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