Complex Made Simple

Kuwait projects off to a good start this year

Kuwait’s projects pipeline remains robust against a backdrop of improving oil prices and a government commitment to maintain healthy capital spending and move forward with its development projects.

According to MEED Projects, KWD1.4 billion ($4.6bn) worth of contracts were awarded in Q1 of 2017, a figure roughly in line with 2016’s quarterly average. Looking ahead, Kuwait could award another KWD6.2bn ($20bn) worth of contracts before year-end.

Oil sector dominates project pipeline

The oil sector dominated awarded projects in Q1 2017. The sector saw KWD672 million worth of awards for eight projects.

The largest project was awarded by KOC to Petrofac for the value of KWD397m ($1.3bn) to build Gathering Centre 32. The new infrastructure will have the capacity to produce about 120,000 b/d of oil and will be the first sour gathering centre to be developed in the Burgan field.

The project is scheduled to begin soon and complete in mid-2020.

KOC awarded another three projects pertaining to water facilities in different gathering centres in the south, south-east and east of the country. The three contracts averaged KWD 69m ($225m) each and are expected to be complete between Q4 2019 and Q1 2020.

Housing sees notable activity

Housing was another sector to see notable activity. In March 2017, the Public Authority of Housing Welfare (PAHW) awarded the second of four infrastructure contracts in South Mutlaa city, a strategic development plan project, to China Gezhouba Group.

The contract, valued at KWD216m ($708m), is for major infrastructure work and is expected to be completed by March 2019.

The PAHW has distributed most of the 30,000 plots to applicants. However, construction permits for the distributed plots will not be available until road and infrastructure construction is complete.

According to a development plan follow-up report for Q4 2016, work on South Mutlaa project is 12per cent complete.

Aviation projects on schedule

Awards during Q1 2017 include work on Kuwait’s airport. The Directorate General of Civil Aviation (DGCA) awarded one of the eleven sub-projects pertaining to the expansion of Kuwait airport.

The project has been awarded to a joint venture for a value of KWD149m ($489million) and completion is expected by March 2022. This project includes construction of new runways in addition to extending existing ones and enhancing supportive infrastructure.

Power & water projects to be awarded in 2017

Looking ahead, project awards are expected to remain healthy in 2017. Another KWD6.2bn ($20bn) worth of contracts could be awarded before year-end, split almost evenly between the second quarter and the fourth quarter of the year; Q3 2017 is likely to see slower activity as a result of Ramadan and the summer season.

Construction projects and power & water contracts are expected to dominate awards during the rest of 2017.