Al-Zour pipeline expected to be retendered

14 May 2015

An invitation for bids on the $800m project is likely to be issued in coming months

  • The pipeline will be connected to the new refinery due to be built in Al-Zour
  • Scope includes the construction of about 250 kilometres of oil feedstock pipelines
  • Larsen & Toubro effectively withdrew its low bid worth $814m
  • Dodsal is the current low-bidder, with a bid worth $922m

Upstream operator Kuwait Oil Company (KOC) is planning to retender its $800m project to build a crude oil feed pipeline for the Al-Zour New Refinery Project in coming months, according to a source that has been briefed by KOC officials and two other sources close to the project.

The retender is yet to be announced officially.

If it is announced by KOC, it will be the second package connected to the Al-Zour New Refinery Project to be retendered in a matter of months.

On 10 May Kuwait formally announced the retender of the tankage package for the Al-Zour New Refinery Project, known as package four.

There is ongoing speculation that other packages connected to the project could also be retendered after low bids for the scheme’s unawarded packages came in $4.2bn over budget.

The Al-Zour refinery will see a 615,000-barrel-a-day (b/d) refinery constructed 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 twice. It saw contracts awarded on the second occasion, but they were cancelled before construction started by the Supreme Petroleum Council (SPC), a government agency that is charged with oversight of the country’s energy sector.

In October 2013, India’s Larsen & Toubro allowed its bid bond for the Al-Zour pipeline project to expire, effectively withdrawing its low bid, worth $814m, to carry out engineering, procurement and construction (EPC) work for a new pipeline.

In the wake of Larsen & Toubro’s withdrawal from the bidding process Dubai-based Dodsal became low bidder, with a price worth $106m more than the price submitted by Larsen & Toubro.

The original bidders list was:

The contract’s scope includes the construction of about 250 kilometres of oil feedstock pipelines that will serve the planned 615,00 b/d greenfield Al-Zour New Refinery in southern Kuwait.

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