Kuwait has cancelled oil tenders worth nearly $10 billion because bids submitted by foreign contractors far surpassed the approved budget.

The nine tenders had been issued by the state-owned Kuwait Oil Company (KOC), the OPEC producer’s upstream investment arm, and aimed to increase output, Kuwait’s Arabic language daily Alqabas said, citing local oil sources.

The central agency for public tenders (CAPT) has endorsed KOC’s request to scrap the nine tenders, which will be re-issued later, the report said.

“KOC had estimated the cost of those projects at around Kdthree billion ($10 billion)…but bids submitted far exceeded that cost,” the paper said, adding that they involve water injection, pipes and other facilities at KOC oil sites.

KOC, one of the world’s largest upstream oil companies, decided to nullify the tenders in line with a strategy endorsed by the parent company, Kuwait Petroleum Corporation (KPC), to stick to approved spending levels and protect public funds, the report said.

“KOC has decided not to go ahead with the tenders although several bids had been submitted…it decided to revise the tenders and re-issue them in the next few months.”

Kuwait, a founding OPEC member, currently has a sustainable oil output capacity of around 2.6 million barrels per day (bpd) and sits atop proven crude deposits of 101 billion barrels, the world’s sixth largest. At present production levels and barring new major discoveries, Kuwait’s reserves could run out in at least one century.

In November 2023, a Zawya Projects report said Kuwait plans to invest $50 billion in the next five years to expand oil and gas output capacity.

KPC’s CEO Sheikh Nawaf Al-Sabah had said investments at an annual average of $9-10 billion will boost Kuwait’s sustainable crude production capacity to 3.2 million bpd.

In the long term, Kuwait has plans to lift oil output capacity to nearly 4 million bpd by 2035 and gas production to 2 billion cubic feet per day in 2040, Sheikh Nawaf had added.

(Writing by N Saeed; Editing by Anoop Menon) 

(anoop.menon@lseg.com)

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