Contractors line up for Kuwait's clean fuels deals

20 June 2008
At least nine groups are set to compete for $18bn worth of contracts to boost refining capacity.

At least nine international contracting groups are submitting prequalification applications for Kuwait’s Clean Fuels Project (CFP) to upgrade the state’s existing Mina al-Ahmadi and Mina Abdullah refineries.

The $18bn project is among the largest downstream investment schemes ever undertaken, larger even than the recently awarded 615,000-barrel-a-day (b/d) refinery at Al-Zour.

The scheme covers the modernisation and upgrade of the two refineries through three main engineering, procurement and construction packages.

One package covers the process units at Mina Abdullah. The other involves process and revamp work, as well as offsite facilities and utilities, at Mina Abdullah and the state’s third refinery at Shuaiba, in advance of its planned decommissioning. The final package covers all facilities and services at Mina al-Ahmadi (MEED 15:2:08).

With the completion of the project, the combined capacity of the two refineries will increase to 800,000 barrels a day (b/d) from 736,000 b/d. With the addition of Al-Zour, Kuwait’s total refining capacity will be 1.4 million b/d by 2014.

Prequalification applicants include Chiyoda Corporation of Japan with South Korea’s Hyundai Heavy Industries, GS Engineering & Construction of South Korea with JGC Corporation of Japan, the US’ KBR with South Korea’s SK Engineering & Construction, Italy’s Snamprogetti with the US’ Foster Wheeler and South Korea’s Hyundai Engineering & Construction Company, CBI Lummus of the US with South Korea’s Samsung Engineering Company, Spain’s TR with Italy’s Tecnimont, UAE-based Petrofac with the US’ Shaw Stone & Webster, and South Korea’s Daelim Industrial Company.

Unlike most major public sector contracts in Kuwait, the main packages on the CFP will be awarded on a cost-reimbursable basis. Under this model, the successful contractor group carries out the engineering element on a rate basis, with the contract converted to a fixed lump sum when engineering is about 70 per cent complete.

The final price has to be agreed by both parties. If not, the client reserves the option to continue the work on a cost-reimbursable basis.

The US’ Fluor Corporation is the consultant on the CFP and its Houston office is handling the prequalification applications.

Separately, on the Al-Zour refinery project, the selected contractors for each of the five main packages have yet to receive letters of intent, despite performance bids having been paid.

Sources close to the project say the delay is due to land issues surrounding a separate private sector concession close to the site of the planned refinery. However, they say the issues are minor and are expected to be overcome shortly.

The client on the CFP and Al-Zour is Kuwait National Petroleum Company (KNPC).

The state refinery operator plans to spend more than $30bn on the state’s downstream sector. Other, smaller, projects include a fifth gas train at Mina al-Ahmadi, for which the UK’s Amec is carrying out a feasibility study.

Australia’s WorleyParsons recently won a consultancy contract covering an acid gas removal plant.

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