Kuwait Oil Awards $305 Million Pipeline Infrastructure Contracts

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Researched by Industrial Info Resources (Sugar Land, Texas)--Kuwait Oil Company (Ahmadi, Kuwait) recently awarded oil and gas pipeline infrastructure contracts worth nearly $305 million to Combined Group Contracting Company (KUW:635) (CGC) (Safat, Kuwait) and Heavy Engineering Industries & Shipbuilding Company KSCC (KUW:SHIP) (Heisco) (Safat).

CGC, a diversified company with interests in civil and mechanical contracting work for the construction of roads, bridges and buildings, the export of equipment and machinery, and investments in real estate, won the $135 million contract to build the crude oil pipeline network for Kuwait Oil in northern Kuwait. The tender for the pipeline work opened in January this year, and CGC emerged as the lowest bidder against other local competitors, which included Heisco and Gulf Spic Contracting Company WLL (Fahaheel, Kuwait). The contract is for the transportation of oil and gas from the Ratqa, Sabriyah and Abdali fields in northern Kuwait, to Kuwait Oil's gathering center 24 and early production facility that are currently under construction in the region. The contract is for a period of 36 months.

Heisco, another leading domestic engineering, procurement and construction company, bagged the $137 million contract to build a 1,000-kilometer pipeline network from the Abduliyah, Dharif and Minagish fields in western Kuwait to gathering center 16. The pipeline infrastructure is being built to transport petroleum reservoir fluid from the existing oil and gas wellheads to the three new facilities at gathering center 16. The gathering center processes black oil to separate it in to crude oil and gas after removal of moisture content.

Kuwait Oil awarded contracts for precursor projects, such as the installation of early production facilities and the development of gathering centers in 2007 and 2008. SK Engineering & Construction Limited (Seoul, South Korea), a leading construction company, is currently building gathering center 24 in the Sabriyah field in northern Kuwait. The $624 million facility is capable of processing 200,000 barrels per day (BBL/d) of crude oil. Construction began in March 2007 and the facility is scheduled for commissioning in the third quarter of 2010.

In April 2008, Processes Unlimited International Incorporated (Berksfield, California), a design and engineering services company for the industrial, oil and gas, material handling, food and beverage, and power sectors, was awarded the $117 million contract to construct an early processing facility for Kuwait Oil. The complex is designed to process 120,000 BBL/d of wet sour crude and 80 million cubic feet per day of liquefied petroleum gas. The facility, which is located in the northern Ratqa and Abdali fields, is slated for completion by April 2010. The scope of the contract also includes construction of a crude export pipeline to connect the early processing facility with gathering center 15, a gas pipeline to booster station 131, and a power station for the plant.

The early processing facility is being developed as a temporary unit, as Kuwait Oil intends to test the processing of wet crude before it beings the planned large-scale wet crude production project. Wet crude contains high water content that needs to be treated and removed through a water effluent system. Kuwait Oil's investment is part of the company's plans to augment oil production to 4 million BBL/d by 2020.

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