Saudi, Kuwait seek bids for Hout oil field work

Firms to submit bids by June 6; budget seen at around $500m-$900m
Saudi, Kuwait seek bids for Hout oil field work
OIL FIELD: A Saudi-Kuwaiti oil joint venture has asked construction firms to bid for offshore and onshore work at Hout, one of the oil fields shared by the two OPEC members (Getty Images)
By Reuters
Thu 21 Apr 2011 01:13 PM

A Saudi-Kuwaiti oil joint venture has asked construction firms to bid for offshore and onshore work at Hout, one of the oil fields shared by the two OPEC members, industry sources said.

Firms need to submit their bids for the work by June 6 to Al Khafji Joint Operations Co (KJO), industry sources told Reuters.

Three sources said the project would cost around $500m while a fourth source pegged it at $900m.

KJO was set up by Aramco Gulf Operations, a subsidiary of state oil firm Saudi Aramco, and Kuwait Gulf Oil Co (KGOC).

The two share the Al Khafji, Lulu, Hout and Dorra fields, which are located in the Neutral Zone between Saudi Arabia and Kuwait.

The winning firm would build offshore gas gathering facilities, pipelines and onshore gas facilities, sources said.

The project would help recover the associated gas, which is now being flared.

International firms have the option to submit a combined proposal which would help reduce the cost of the project, one of the sources said.

"The key to success is to provide a combined proposal," said one source who declined to be identified.

Khafji, located in the Neutral Zone between Kuwait and Saudi Arabia, has an oil capacity of around 610,000 barrels per day.

Most of the gas produced by both countries is a by-product of oil output, so when they pump less crude, they pump less gas.

Tight supply has been exacerbated by Saudi Arabia's and Kuwait's adherence to OPEC's oil output curbs since December 2008.

Kuwait is plugging the gap between supply and demand with imports of liquefied natural gas (LNG) while the world's largest oil exporter Saudi Arabia has stepped up its exploration for gas after it completed a massive curde expansion programme in 2009.

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