The process was delayed to Aug. 1 from June 6 upon the request of the companies seeking more time to submit their bids for the project, which involves building offshore gas gathering facilities, pipelines and onshore gas facilities.

The project developed by the Al-Khafji Joint Operations Co (KJO) would help recover the associated gas, which is now being flared.

Khafji, located in the Neutral Zone between Kuwait and Saudi Arabia, has an oil capacity of around 610,000 barrels per day (bpd).

Most of the gas produced by both countries is a by-product of oil output, so when they pump less crude, they pump less gas.

The two oil producers have started to optimize their crude output above the set OPEC quota levels but both had seen tighter gas supply as a result of the agreed OPEC cut in December 2008.

Kuwait continues to plug the gap between supply and demand with imports of liquefied natural gas (LNG) while Saudi Arabia is expediting work on raising gas production after it completed a massive crude expansion program in 2009.

Saudi Aramco pumped in 2010 9.4 billion cubic feet per day (cfd) of gas, up from 8.6 billion cfd in 2009.

As for Kuwait, it plans to nearly quadruple its gas output to more than 4 billion cubic feet per day (cfd) by 2030.

KJO was set up by Aramco Gulf Operations, a subsidiary of state oil firm Saudi Aramco and Kuwait Gulf Oil Co (KGOC), a unit of KPC.

The two share the Al-Khafji, Lulu, Hout and Dorra fields, which are located in the Neutral Zone between Saudi Arabia and Kuwait.