The joint venture developing the disputed Dorra/Arash offshore gas field has progressed key tenders despite geopolitical tensions. Technical and commercial bids were submitted on March 9 for the project's two largest offshore packages, 2A and 2B, after months of delay. This indicates the client's keenness to advance the project.

Project Scope and Dispute

The Dorra field lies in the neutral zone between Saudi Arabia and Kuwait and is expected to produce 1 billion cubic feet per day of gas and 84,000 barrels per day of condensate. Its development is led by Al Khafji Joint Operations (KJO), a venture between subsidiaries of Saudi Aramco and Kuwait Petroleum Corporation. However, the project is entangled in a long-standing dispute with Iran, which calls the field Arash and asserts sovereignty over it. Iran has repeatedly questioned the development, describing the Saudi-Kuwaiti move as "illegal."

Current Tender Progress and Challenges

The bid submission for offshore packages 2A and 2B proceeded despite the Middle East conflict and the dispute with Iran. These packages involve substantial work:

• Package 2A: Includes gas wellhead topsides, flowlines, and umbilicals.
• Package 2B: Involves the central gathering platform complex, export pipelines, and cables.

Together, they encompass multiple offshore facilities, subsea pipelines, and over 50,000 tonnes of fabrication. However, sources note that taking a final investment decision remains highly challenging amid the regional war and the field's disputed status.

Bidders and Project Value

Bidders for the packages include major international consortia:

• For Package 2A: McDermott International, NMDC Energy, and a Saipem-Larsen & Toubro consortium.
• For Package 2B: A Saipem-L&T consortium and a Hyundai Heavy Industries-NMDC Energy consortium.

The total value for all onshore and offshore packages (1, 2A, 2B, and 3) is estimated to exceed $10 billion. Package 1, comprising wellhead jackets, was awarded to L&T last year. Onshore Package 3, which includes a MEG recovery plant, is also progressing.

Strategic Importance and Outlook

Analysts note the project holds strategic importance for both Saudi Arabia and Kuwait and could be expedited. Contract awards are expected in the coming months as the situation normalizes, aligning with the Kuwaiti oil minister's recent statement that the project no longer faces obstacles and tenders would be issued. The project's front-end engineering and design was handled by Technip Energies, which conducted engagement meetings with bidders in 2024.