Kuwait weighs cancelling $8.7bn oil project tenders after bids exceed budgets

Kuwait is reviewing the possible cancellation of a series of major upstream oil project tenders valued at approximately $8.7 billion, after bids for several contracts reportedly came in well above budget, raising concerns over cost efficiency and fiscal impact.

The tenders cover five large upstream packages and are part of Kuwait’s broader investment programs aimed at boosting production capacity and upgrading oil infrastructure.

However, high bid prices have prompted government and industry stakeholders to reassess the viability of proceeding under current terms, according to MEED.

Sources familiar with the process indicated that the pricing submitted by contractors exceeded initial cost estimates, triggering discussions on whether to cancel, restructure or re-tender the projects.

The move reflects growing emphasis on fiscal discipline amid budget pressures and the need to manage public spending carefully.

Kuwait has been grappling with recurring fiscal challenges, including concerns over its breakeven oil price and the sustainability of large capital expenditures. This economic backdrop is increasingly influencing decisions on major infrastructure investments, particularly in capital-intensive sectors such as oil and gas.

Industry analysts note that outright cancellation may not be the only option under consideration. Authorities could choose to re-tender the projects with revised scopes, adjust budget frameworks, or split large packages into smaller contracts to encourage wider participation and improve competitiveness.

Other options include introducing alternative commercial or financing models that would reduce upfront capital commitments and share risk with contractors.

The potential cancellation of nearly $9 billion in projects sends a cautious signal to both local and international contractors operating in Kuwait’s energy market. It may impact contractor confidence, future bidding strategies and pricing expectations for large engineering, procurement and construction (EPC) contracts.

At the same time, the review is seen by some as an opportunity to refine procurement frameworks, enhance transparency and remove barriers created by restrictive prequalification or evaluation criteria.

While any decision to cancel or delay the tenders could disrupt project timelines in the short term, it may also help align future contracts more closely with Kuwait’s fiscal priorities and long-term production goals.