Contractors prepare for Al-Zour refinery

24 February 2006

State refinery operator Kuwait National Petroleum Company (KNPC) is understood to have completed prequalification for the four main packages on its 615,000-barrel-a-day (b/d) grassroots new refinery project (NRP) at Al-Zour. The shortlist has been sent to the Energy Ministry and the Council of Ministers (cabinet) for final approval, with tendering set to start as soon as the go-ahead is given (MEED 19:8:05).

The shortlist has been split into several tiers, depending on the contractors' capabilities and expertise in relation to each of the four engineering, procurement and construction (EPC) packages.

For the estimated $2,000 million-2,400 million first main process package, covering the three 205,000-b/d crude distillation units (CDUs) and diesel, naphtha and kerosene hydro-treaters, just four international contractors are expected to be prequalified. They are Paris-based Technip, Italy's Snamprogetti, and JGC Corporation and Chiyoda Corporation, both of Japan. The same four are understood to have also been shortlisted for the estimated $900 million offsites and utilities (O&U) package. For both contracts, the four must bid separately, although they can team up with the second tier of prequalified companies.

The second tier of prospective prequalifiers is understood to include: Hyundai Engineering & Construction Company, GS Engineering & Construction and SK Engineering & Construction, all of South Korea; Foster Wheeler, Shaw Group and Washington Group International, all of the US; UAE-based Petrofac International; and a Spanish/Korean team of Tecnicas Reunidas and Daelim Industrial Company.

The second-tier prequalifiers will be eligible to bid for the estimated $1,000 million second process package, covering the three 110,000-b/d atmospheric residue desulphurisation (ARDS) units, as well as team up with the tier-1 firms for the O&U and process package 1 contracts.

A number of firms, including South Korea's Hyundai Heavy Industries (HHI), an Italian/Japanese venture of Saipem with Marubeni Corporation, the US' Chicago Bridge & Iron and Petrofac, are likely to be prequalified for the estimated $500 million marine works and tank farms package.

In addition, KNPC is expected to shortlist at least four international contractors as nominated subcontractors. They are expected to include Spain's Dragados, South Korea's Samsung Engineering Company, Italy's Techint and Germany's Uhde. At least 30 international companies submitted prequalification applications last autumn, but several were either disqualified or later withdrew. KNPC is understood to be trying to encourage some firms to reconsider competing for the project (MEED 2:12:05).

Scheduled to come on stream in 2010, the new refinery will be the largest in the region and one of the biggest worldwide. It is aimed primarily at providing fuel oil for the state's power plants, but has been configured to switch to refine export crude if a source of natural gas is found. The Houston office of the US' Fluor Corporation is the front-end engineering and design (FEED) and project management contractor. Foster Wheeler carried out the initial feasibility study (MEED 28:10:05).

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