Kuwait issues contracts for Al-Zour refinery

Kuwait National Petroleum has issued three contracts worth US$11.5bn for the long-awaited Al-Zour oil refinery. They have been awarded for what would be Kuwait’s fourth refinery, Kuwait’s state news agency reports.

A consortium including Tecnicas Reunidas, China’s Sinopec and South Korea’s Hanwha Engineering and Construction won a contract worth 1.28bn dinars to build the refinery’s main processing units.

A second contract worth 1.74bn dinars for support units and infrastructure services was awarded to a consortium including Daewoo Engineering and Construction and Hyundai Heavy Industries of South Korea, and US contractor Fluor.

A third consortium including South Korea’s Hyundai Engineering and Construction and SK Engineering and Construction along with Italy’s Saipem won a 454m dinar contract to build a marine export terminal.

The refinery’s capacity will be 700,000–800,000 bbl/d up from initial plans for 615,000 bbl/d, Alrainewspaper reports, citing Kuwait oil minister Ali Al-Omair. This higher processing capacity would make it the fifth largest in the world after facilities in India, South Korea and Venezuela. Al-Omair announced earlier this month that the total budget for the project had been increased by 871m dinars to 4.87bn dinars, and said there have been discussions about adding a petrochemical complex to Al-Zour.

Crude producers in the Gulf region are increasingly looking to move downstream in a bid to add value to their oil wealth, and provide a buffer against cyclical fluctuations in oil price.

“The products of Al-Zour refinery will be mainly for meeting local demand in Kuwait and the Middle East as demand for refined products is slowing down in Asia,” Essam al-Marzouq, a Kuwait-based independent analyst told Bloomberg Businessweek. “The cost of the refinery has inflated and let’s hope that current market dynamics can support the economics of the refinery.”

Once completed, the refinery will extend Kuwait’s processing capacity to 1.4m bbl/d up from 930,000 bbl/d at its three existing facilities. Last year, Kuwait issued contacts worth US$12bn to expand and clean up production at these sites.

Political problems have delayed efforts to build the Al-Zour refinery, which was first announced in 2007. Previous contracts issued for its construction were cancelled in 2009 with suggestions that KNPC had not followed tender rules.

Source: The Chemical Engineer