Kuwait’s projects market continued to expand in the second quarter of this year in spite of the low oil prices and the state is expected to award another KD8.4 billion ($27 billion) worth of contracts before year-end, a report says.
Kuwait awarded KD812 million ($2.7 billion) worth of contracts in Q216, according to Meed Projects, bringing the total value of contracts awarded so far this year to KD2.25 billion ($7.5 billion), said the NBK report.
By the end of June, Kuwait’s projects market (active and planned) grew to KD76.8 billion ($255 billion), an increase of 2.9 per cent year-to-date.
Although Kuwait’s project market faces many challenges on top of low oil prices, such as lack of FDI interest, a weak private sector and a less attractive environment than its neighbours, the economy is cash-rich and the government has an ambitious five-year plan that includes currently over eight public private partnership schemes aimed at improving the country’s aging infrastructure, it said.
According to Meed Projects, bids for the bulk of 2016’s planned projects (44 per cent) are currently under evaluation, followed by 27 per cent that are in the main contract bid stage which means that over 71 per cent of the planned projects are within their final stage prior to execution, the NBK report said.
Oil & gas
Following the awards of the two huge Clean Fuels Project (CFP) and New Refinery Project (NRP) in 2014 and 2015 respectively, the value of Kuwait’s oil sector projects in the pipeline has begun to soften. Oil & Gas projects account for 27 per cent of the planned projects in Kuwait for 2016, behind the transport and the power and water sectors. However, Kuwait still has KD2.3 billion worth of projects to award this year.
In H116, Kuwait National Petroleum Company (KNPC) awarded a KD882 million ($2.9 billion) contract to build the liquefied natural gas (LNG) import and regasification terminal.
Kuwait is also expanding domestic gas production with the tendering of the Jurassic Non-Associated Gas Reserves project in northern Kuwait. Kuwait Oil Company (KOC), the state’s upstream operator, has tendered three contracts worth KD1.7 billion ($5.7 billion) for the development of the project, which aims at producing 10,472 tonnes of natural gas per day. In January, US firm Schlumberger was awarded the KD144 million ($480 million) contract to develop the Sabriyah and Umm Niqa fields. Schlumberger also reportedly submitted the lowest bids for the East Raudhatain package and West Raudhatain package.
KOC has also retendered the KD240 million New Refinery Feed pipeline contract, which aims to connect the South Tank Farm to the New Refinery at Al-Zour. The contract has been retendered following parliamentarian criticism of its initial tendering in 2015.
Kuwait awarded KD570 million ($1.7 billion) worth of construction projects in the first half of 2016. The biggest and most notable award was for the New Maternity Hospital. The new 600-bed Maternity Hospital is to be built opposite the existing maternity hospital in Sabah Medical Area. The hospital is one of four that were tendered and then cancelled in 2013 for being over budget. The contract has been awarded to Italian firm Pizzaroti for KD219 million ($730 million).
Under the direction of His Highness the Amir, the Amiri Diwan has taken on several key projects. The Diwan answers to the Amir himself, therefore bypassing red tape and the plethora of decision-making bodies. The Diwan’s project portfolio includes projects such as the new Al-Jahra Hospital, Al-Shaheed Park and Kuwait’s two cultural centers (Abdullah Al-Salem & Jaber Al-Ahmed) set to be completed by year’s end.
Power and water
Kuwait Authority for Partnership Projects (KAPP) has extended the deadline for three of its projects that were scheduled to be tendered this year. The main contract bid for the KD450 million ($1.5 billion) Umm Al-Hayman Wastewater Treatment Plant has been pushed to August 31, while the bid for the Kabd Municipal Solid Waste Project has been rescheduled to July 28. Bids for the Al Abdaliya Integrated Solar Combined Cycle (ISCC) Power Plant (CSP) have also been pushed to July 28. The project will see Kuwait utilising solar energy and help reduce the level of environmental pollution. The project will be developed on an area of 2 sq km.
KAPP has announced the main contract bid for phase 2 of the Al-Zour North IWPP. The project aims at producing 1,800 MW of electricity and 464,100 cu m a day of desalinated water. Three consortiums involving 11 companies have submitted their bids, according to an announcement by KAPP on June 21, though no details were provided.
Kuwait is investing heavily in the transportation sector. The sector accounts for 34 per cent of the value of planned projects in 2016. According to Meed Projects, Kuwait is planning the development of the North and East Regional Highway, a KD517 million upgrade to roads that will facilitate the growth of inter-regional and international trade within the GCC states.