KUAIT - New Contract Terms.

Adly Abu Amarah, team leader for contracts at KOC, in March 2007 announced details of the company's enhanced lump-sum turnkey (LSTK) contract which it planned to use for all future projects. Key changes include contracts which provide for provisional sums where the nature and extent of the work cannot be properly defined at the tender stage. There was to be a board to review disputes and options to cover commodity and currency price fluctuations.

The new contract was a recognition of what was needed to be done to attract big international engineering, procurement and construction (EPC) contractors to Kuwait's petroleum sector, which has been dominated by a handful of firms. MEED on March 16 quoted a "leading Gulf contractor" as saying: "Contractors have been scared away in the past because nothing was very well defined and joint ventures were difficult. This move may result in some of the regional players considering Kuwait again".

The change was to bring KOC's procedures in line with other IOCs and give the company a better chance to complete projects on time and on budget. Abu Amarah said: "Under the [new] conditions, contractors have a far greater capacity to bid for projects". Other elements of the plan were to include introduction of minimum performance guarantees and termination costs until then included within the limit of liability.

Calgary-based Datalog Technology in April 2007 won a KD10.6m ($36.7m) contract to provide mud-logging services covering workover operations for KOC. This is similar to a series of other mud-logging deals, totalling more than $300m, signed in August and October 2006 by KOC with local and international companies. They included deals with the US' Haliburton and Baker and Hughes.

KOC in March gave three five-year contracts, worth more than KD115m ($397m), for the supply and operation of drilling rigs. The local Burgan Co. for Well Drilling, Trading & Maintenance got two of the contracts. The larger one, KD46.6m ($160.7m), covers the supply of two 2,000-hp rigs. The second, KD23.6m ($81m), is for a 1,500-hp rig. The third, worth KD46.8m ($161m), went to Kuwait Drilling Co. for the supply of two 2,000-hp rigs. In 2006 KOC spent more than $500m acquiring rigs.

The local Raith Engineering & Manufacturing Co. in May got a $20.8m KOC contract to provide well completion, equipment and associated services. At about the same time, KOC gave a KD3.2m ($11m) contract to the local Mushrif General Trading & Contracting Co. to improve header emergency shutdown systems to cover Gathering Centres (GC) 3, 4, 6, 7, 8 and 21. The local Ahmadiah Contracting & Trading Co. won a KOC field infrastructure contract worth KD5.6m ($19.3m) to upgrade and install air-assisted flare stacks at GS 17, 27, 28, as well as at gas booster station 170.

Precision Drilling Corp. of Canada in May got a KOC contract worth KD16.6m ($57m) to supply and operate two rigs for five years. KOC has invited rig operators to submit bids by June 26 for a five-year contract to supply and operate two 3,000-hp rigs.

High Arctic Energy Services Trust in March got a much-anticipated five-year contract to provide KOC with services for workover operations. Snubbing and hydraulic workover operations in various KOC fields are expected to begin in the second quarter of 2007. The contract was based on a bid submitted in August 2006 and was worth about $34m. High Arctic was to redeploy existing equipment from its Canadian operations.