Al-Zour refinery talks step up a gear

26 March 2015

Meetings scheduled to discuss pricing

  • Five meetings to discuss pricing and scope
  • Meetings arranged for week starting 26 March
  • KNPC said to be keeping its cards very close to its chest

Five meetings with contractors to discuss the pricing and scope of the marine package for the Al-Zour New Refinery Project (NRP) have been arranged for the week starting 26 March.

“We know very little about exactly what will be discussed at the meeting,” says an executive who has been invited to a meeting with state-owned downstream operator Kuwait National Petroleum Company (KNPC).

“Price is likely to be the key issue. KNPC wants to try and push the price down and we may discuss how changing the scope of the project could achieve this.”

“KNPC is keeping its cards very close to its chest,” says another executive.

The meetings come after the prices submitted for the refinery’s process units and utility packages were announced by Kuwait’s Central Tenders Committee (CTC) on 9 March.

The low bids for the six unawarded packages that make up the NRP have come in $4.2bn over budget, stoking concerns the multibillion-dollar scheme may be retendered.

Out of the six packages, the marine package, known as package five, has exceeded its budget by the biggest percentage.

The low bid of about $1.6bn came in 81.8 per cent higher than KNPC’s budget for the package, which is $850m.

It was submitted by a consortium made up of South Korea’s Hyundai Engineering & Construction, Italy’s Saipem, and India’s Essar.

In February, KNPC’s deputy CEO told a local newspaper that the company was considering retendering packages four and five due to discrepancies between bidding prices and allocated budgets.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications