Oil Hits $50 per barrel
Crude oil futures traded above $50 at the open on 28th September 2004 for the first time ever in regular New York trading, up 38 cents at $ 50.02 per barrel. The price was a record for regular hours trade on the New York Mercantile Exchange, but held below the after-hours level of $ 50.47 overnight. Traders were worried over unrest in major oil producers Nigeria (an important supplier to the US market) and Saudi Arabia, recent hurricanes in Gulf of Mexico, violence in Iraq and the financial woes of Russian energy giant Yukos.
“It is all about supply disruptions, not just in the Middle East but also in Nigeria, in the Gulf of Mexico or in Russia”, said Commerzbank Energy Analyst David Thomas. “On the top of that, we have ever-tightening inventories with the further forecast of crude stocks being down again the US because of the hurricane activity” , he added.
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In London, the price of reference Brent North Sea crude oil for delivery in November hit a new summit of $ 46.80 in electronic trading, the highest level since trading in the London market began in 1980. Adjusted for inflation, world oil prices remain far below the levels reached in the wake of the 1979 Iranian revolution, when prices surged to about $ 80 a barrel in today’s money.
Meanwhile, Saudi Arabia, the world’s largest oil exporter, will raise production capacity to 11 million barrels daily in an attempt to rein in prices, Oil Minister Ali Naimi said on 28th September. There has been some concern about whether Saudi Arabia, which has been pumping 9.5 million barrels a day, about a million barrels a day shy of capacity, would be able to significantly boost production. Naimi said in a statement that the new capacity will come from fields where production has just begun.
By increasing capacity, Saudi Arabia will be able to raise production when it wants. A Saudi Oil Ministry official, speaking on condition of anonymity, said that the Kingdom would increase production, “depending on demand”. Last month, Naimi had said his country was willing to provide an extra 1.3 million barrels of oil a day to the world market if required to do so. OPEC had said earlier that producers were seeking ways to calm markets after an announcement that the Cartel would boost production by 1 million barrels a day beginning in November failed to bring down prices.
“The fields of Abu Safa and Al-Qatif, which have just started production, will be used to increase the kingdom’s production capacity in the coming few weeks to 11 million barrels per day”, Naimi said in the statement. “In the light of recent developments in the oil market and the increase in prices that exceeded US$ 50, Saudi Arabia is closely monitoring the various developments in the international oil market and is working on stabilizing that”, he said. The price of oil is up about 75 per cent from a year ago and some analysts were predicting the latest surge – which is already hurting airlines and other big consumers - could lead to a global recession. Naimi said the increase was meant to control “prices so that they will not harm international economic growth”.
Local Companies win Road Contracts
The Fifth Ring Road Extension Project in Kuwait worth $ 94 Million, has been awarded in two packages to two local companies namely Copri Constructions ($ 73 Million) and Burhan International Contracting Company ($ 21 Million).
The first portion awarded to Copri Constructions involves upgrading of 3 km long section between the Fahaheel Expressway and Al-Taawin Street.It also involves conversion of the ring-way into an expressway with associated modifications to the existing intersections and roundabouts.
The second portion awarded to Burhan Int’l Contracting Company includes upgrading of the interchange on the crossings of the Fifth and First Ring Roads and Fahaheel Expressway, with modifications to the existing interchange on the crossing of the Fifth Ring Road with Kuwait International Airport road. The scope also involves improvements to the 4.5 km long access road to the Airport from Farwaniya.
KUWAIT AIRWAYS has a new Chairman
Sheikh Talal Mubrak Abdullah Al-Ahmed Al-Sabah has been appointed as the Chairman & Managing Director of Kuwait Airways Corporation (KAC).
Sheikh Talal joined KAC in 1977 and has been the General Manager since 1999.
Bids invited for the PMS Tender for KASP
Bids are being invited by the Directorate General of Civil Aviation (DGCA) from selected International Consultants for the Project Management Services (PMS) Contract on its Airspace Upgrade and Expansion programme, namely Kuwait Airspace System Plan (KASP).
Parsons International (USA), Wilbur Smith & Associates (USA) and Dar Al-Handasah of Beirut are expected to be in the run.The project includes several packages such as Installation of Control Systems, a Mateorology Center and a Command Center. It also includes supply and installation of a new MSSR Approach Radar System, an Airport Data Integration Network and a low-level Windshear Alert System.
Umm Al-Maradem gets Mobilized
The local Kuwaiti company Gulf Dredging & Contracting Company (GDC), who have been awarded the $ 19 Million project of developing new harbor stations and related facilities for the coastguard on Umm Al-Maradem, have started the project mobilization.
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The project comprises of the construction of an 840 meter long breakwater, jetties, pontoons and quays for nine vessels and a disposal area, dredging of about 117,000 cubic meters and related civil, electrical and mechanical works. The project duration is expected to be 12 to 18 months.
Failaka Pre-Qualifications Submitted
Nearly 20 companies have submitted their applications for pre-qualification for the Failaka Island Development Project.
The Divided Zone Agreements & Kuwaiti Islands & Mega Project Development Team(DIZART) are the clients. The evaluation of the applications may take about a month. The bid documents are expected to be issued to the
pre-qualified companies by end December 2004 and the bids are expected to close by March 2005.
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This mega project, worth about $ 5,000 Million is aimed at developing the Failaka Island into a popular tourism resort. The project will be executed on a Build-Operate-Transfer (BOT) basis. A minimum of three 20-year BOT contracts are expected to be tendered, which will comprise of construction of chalets, hotels and leisure & entertainment facilities.
Major Changes in Management of KPC, KOC, KNPC
Major Top Management Personnel changes are underway in the Oil Sector companies of Kuwait.
Mr. HANI HUSSEIN (the current Chairman & Managing Director of Kuwait National Petroleum Company-KNPC) will take over as the Deputy Chairman & Chief Executive Officer of Kuwait Petroleum Corporation (KPC) from Mr. Nader Hussain, who is retiring.
Mr. FAROUK AL-ZANKI (the current Head of Exploration & Development and Deputy Chairman of the Board) will take over from Mr.Ahmed Al-Arabeed, as the Chairman & Managing Director of Kuwait Oil Company (KOC).
Ethane Recovery Unit (Mina Ahmadi Refinery)
The tender for constructing a Ethane Recovery Unit (ERU) at Mina Al-Ahmadi Refinery is closing on 3rd October 2004. Out of the 10 companies pre-qualified for this project, only the following four companies are expected to put in the bids:
1. Hyundai Engineering & Construction, Korea
2. LG Engineering & Construction, Korea
3. SK Engineering & Construction, Korea
4. Petrofac International, Sharjah
This $ 365 Million project is designed to handle 1,140 million cubic feet a day of gas and extract ethane from the lean gas of the refinery’s liquefied petroleum gas unit.
KOC extends closing date for flowline upgrade & replacement project.
Kuwait Oil Company has extended the closing date to 17th October 2004 for submitting the EPC bids for flow lien upgrade and replacement project. The project will be awarded in two contracts of an estimated value of $830 million. The contract covers the replacement of existing underground crude oil and gas flow lines and
upgrade/rehabilitation of 17 Gathering Centers and three Gas Booster Stations .
KOC re-tenders Oil Storage & Export facilities project
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Kuwait Oil Company is planning the re-tender the EPC bid for the proposed Oil Storage and Export Facilities in Mina Al-Ahmadi, which was earlier cancelled late last year during the evaluation stage. The following companies are qualified to bid for this project:
1. Aker Kvaerner, Oslo
2. Technip, France
3. JGC Corporation, Japan
4. Kellogg Brown & Root, USA
5. Bechtel, USA
6. ABB Lummus Global, USA
In the previous bid, Aker Kvaerner was the lowest bidder with $ 779 Million.
The project involves construction of 11.4 million barrel of crude oil storage capacity.
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