Al-Zour gets the green light

15 July 2015

Extra funds approved for refinery megaproject

  • Kuwait Petroleum Corporation has approved $2.87bn in extra funds
  • Decision was made at a meeting on 14 July
  • It comes after extensive delays to refinery megaproject

Kuwait’s national oil company, Kuwait Petroleum Corporation (KPC), has approved KD871m ($2.87bn) in extra funds for the Al-Zour New Refinery Project (NRP), increasing optimism that the five main packages for the scheme will soon be awarded.

In a meeting on 14 July, KPC board members discussed the NRP and agreed to expand the project’s budget.

The decision comes 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 $3.7bn over budget.

According to industry insiders, before contracts can be awarded the extra funds still need to be approved by Kuwait’s Supreme Petroleum Council, the government agency charged with oversight of the country’s energy sector.

The Al-Zour scheme is part of a plan to overhaul Kuwait’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 before construction was started by the Supreme Petroleum Council.

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