ABB Wins $160m Kuwait Contract

Swiss industrial conglomerate ABB has won a contract worth $160 million from Kuwait’s ministry of electricity and water (MEW) to construct two substations in the northern region of the country.

The substations will aid the expansion of oil fields in the northern region of Raudhatain and will support the Gulf state’s long-term vision in raising its crude output, ABB said in a statement.

The company added that the order, which was for turnkey projects, was booked in the fourth quarter of 2013.

ABB said that the substations are scheduled to be completed by 2016.

Kuwait, whose crude oil reserves account for 10 per cent of global reserves, has been investing significantly in its power infrastructure. The Gulf country is also planning to raise its crude oil production from the current level of 2.9 million barrels per day (bpd) to four million barrels per day by 2020.

But despite such ambitions, Kuwait has been unable to raise its production capacity till date due to out dated technology and periodic power outages.

Earlier this year, three oil refineries in the country, with a joint capacity of around 930,000 bpd, were shut down due to a power failure.

The three complexes – the 460,000 bpd Mina Ahmadi, 270,000 bpd Mina Abdullah and 200,000 bpd Shuaiba refineries – were all knocked out at the same time, suggesting that the fault lies with the state electricity supplier and not onsite electrical faults, industry officials said.

A shortage of natural gas to feed power plants also strains stability of electricity supplies, especially in summer when Kuwait relies on costly imports of liquefied natural gas shipped in from around the world to meet a seasonal demand surge.

“Kuwait is perpetually in a state of electricity supply shortage and experiences frequent blackouts and brownouts each summer,” the U.S. Energy Information Administration said in an analysis.

“In the past decade, the development of Kuwait’s electricity sector has stalled because of political factors and lack of investment, despite average annual demand growth of six per cent.”

Subsidised electricity rates have pushed up per capita energy consumption in the Gulf state with power consumption forecast to rise further by 2030.