Al-Zour contracts to be awarded in August

22 July 2015

Kuwait’s oil minister says rapid progress on refinery megaproject is expected

  • Comments come after budget increase is approved
  • Budget has been increased by $2.9bn
  • Megaproject has seen extensive delays since bids were announced for scheme’s process packages

Contracts for some of the five unawarded packages for the Al-Zour New Refinery Project will be awarded in August, according to statements made by Kuwait’s Oil Minister Ali al-Omair.

His comments come after approvals for a KD871m ($2.9bn) budget increase were secured from both the board of national oil company Kuwait Petroleum Corporation (KPC) and the government agency charged with oversight of the country’s energy sector, Kuwait’s Supreme Petroleum Council (SPC).

The approvals from the KPC board and SPC come after extensive delays to the refinery megaproject since bids were announced for the scheme’s process packages in March.

The delay was due to low bids for the scheme’s five unawarded packages coming in at $3.7bn over budget.

Kuwait’s Al-Zour scheme is part of a plan to overhaul the country’s refining sector, slash the sulphur content in its fuels and lift its refining capacity from 930,000 barrels a day (b/d) to 1.4 million b/d by 2020.

The project will involve the construction of a 615,000-b/d refinery on a greenfield site in the Divided Zone, which is shared with Saudi Arabia and has a long history of delays and setbacks.

Since it was first announced in 2005, the scheme has been tendered three times. It resulted in contracts being awarded on the second occasion, but they were cancelled by SPC before construction was started.

The five unawarded Al-Zour Refinery packages

Package one (process plant)

Package two (process plant)

  • Low bidder: Tecnicas Reunidas (Spain) / Sinopec Engineering (China) / Hanwha Engineering (South Korea)
  • Low bid: KD806m

Package three (utilities and offsites)

Package four (Tankage package, retendered in June)

Package five (Marine package)

  • Low bidder: Hyundai E&C (South Korea) / Saipem (Italy) / Essar (India)
  • Low bid: KD463m

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