Hyundai Awarded Bubiyan Port Contract

South Korea's Hyundai Engineering and Construction has been awarded a US$1.14bn contract to develop the Bubiyan port in Kuwait. The port is being built to serve as a gateway to both Kuwait and Iraq.

The contract was awarded to Hyundai in partnership with Kuwait's Kharafi Group, according to reports from Kuwaiti news source, Al-Rai, as cited by Reuters. The contract is for the second part of the first phase of the project. The development will be carried out in four phases and is expected to cost around US$3.47bn in total.

The tender for the project has been repeatedly delayed in order to give potential bidders more time to prepare. Hyundai was one of five prequalified bidders in the running. The design and construction contract is for: site preparation and construction of container terminal; four berths; a 1,300m long quay; and, surrounding port infrastructure, according to MEED as cited by Steel Guru.

The port project, which is planned to develop Kuwait's largest island - Bubiyan - into a commercial seaport, was approved by the Council of Ministers in 2004. The first four berths were initially planned to be up and running by 2008. However, progress has been severely and repeatedly delayed due to: increased security concerns related to the ongoing Iraqi invasion; the presence of ordinance in the river mouth and on the island; and, the poor quality soil on the island. Plans have been altered over the years, the latest change in 2009 upped the number of berths from 24 to 60.

The contract for the first part of the first phase was signed in 2007, and was awarded to a China Harbour Engineering Co., and two Kuwaiti companies: Heavy Engineering Industries and Shipbuilding Company, and Shaheen Al Ghanim Roads and Bridges Construction Company. The US$400mn contract includes construction of a 34km bridge linking the island to the mainland, according to the Kuwait News Agency (KUNA). Funds have also been allocated to build a railway to Kuwait city at a later date.

The port is designed to capitalise on increased maritime trade to neighbouring Iraq during the country's reconstruction period. Iraq's port infrastructure is unable to cope with the expected demand once the country beings to rebuild its infrastructure and the economy picks up. Iraq has a relatively small coastline, less than 100km on the Persian Gulf and it boasts just one deep-sea commercial facility, the Port of Umm Qasr. However, plans are in place to develop the country's port sector, with plans for a new large seaport - the Basrah Grand Port - being developed.

Kuwait has to some extent missed the boat on the reconstruction boom in Iraq, especially as construction of the port will take between four and five years. However, reconstruction is progressing slowly in Iraq, due to the high level of the infrastructure deficit and the ongoing security concerns. Consequently there will still be demand for port capacity in the area once Bubiyan port is completed (although negated by the Basrah Grand Port if and when it is completed), and this will continue as Iraq's economy returns to normalcy.

This article is tagged to:
Sector: Freight Transport, Infrastructure, Shipping
Geography: South Korea, Kuwait

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