Al-Zour refinery bidders asked to renew bonds

21 May 2015

Budget increase for the three process packages is yet to be approved

  • Bid bonds will be extended until 6 December
  • Kuwait National Petroleum Company requested a bigger budget for the project in April
  • Package four of the Al-Zour refinery project has been retendered

Bidders on packages one, two and three for the Al-Zour New Refinery Project have been asked to renew their bid bonds, signalling that Kuwait authorities are yet to have approved the Kuwait National Petroleum Company (KNPC) request for a budget increase.

Kuwait’s Central Tenders Committee (CTC) issued a letter on 17 May asking the consortium leaders for the three process packages to extend their bid bonds until 6 December.

In April sources close to the project told MEED that state-owned downstream operator Kuwait National Petroleum Company (KNPC) was seeking permission to increase the budget for the Al-Zour New Refinery Project by  $2.88bn.

The request came after the low bids for the project’s five unawarded packages and the associated feed pipeline came in $4.2bn over budget.

For the new budget to be implemented it will have to be approved by the board of KNPC, as well as the board of Kuwait Petroleum Company (KPC).

It’s thought that the new budget may need to be approved by Kuwait’s prime minister and oil minister.

Already the tankage package, known as package four, has been retendered.

An $800m-pipeline project connected to the Al-Zour New Refinery Project is also expected to be retendered over coming weeks and there are concerns that other packages for the New Refinery Project will also be retendered.

Out of all the five unawarded packages, the low bid on package four was the closest to being within budget.

The Al-Zour project 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.

It will see a 615,000-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 three times. 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.

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