Kuwait’s $17bn Al-Zour refinery project, which is due to come online in May 2019, has been derailed by delays to a pipeline that was intended to transport crude oil to the facility, according to industry sources.

The $850m feed pipeline was originally tendered in May 2014, but the tender process was cancelled amid a corruption scandal in 2017.

It was then retendered and awarded to the Italian engineering, procurement, construction contractor Saipem in July of that year.

Due to delays that were caused by the retendering process the pipeline will not be finished until long after the date that the refinery is supposed to start operating, according to sources.

“It’s just not going to happen,” said one source. “Officials are now looking at a range of alternative solutions.”

The solutions being considered include changes to existing contracts as well as new initiatives.

Possibilities include creating unloading facilities and bringing crude in by sea or making adjustments to existing pipelines so that they can be used to deliver crude to the refinery.

Whatever the alternative is, it is unlikely to allow the refinery to operate at its full capacity.

The delayed pipeline has been designed to supply 615,000 barrels a day (b/d) of crude to the refinery as well as 300 million cubic feet a day (cf/d) of gas.

The pipeline is not the only part of the refinery project that is behind schedule, according to industry sources.

“Like many large projects in the Middle East this scheme has fallen behind schedule,” said one source.

“The other areas where the project has seen slow progress are worrying, but the problem with the feed pipeline is definitely the main obstacle.”

In December the Kuwait Petroleum Company (KPC) subsidiary responsible for the refinery project, Kuwait Integrated Petroleum Industries Company (KIPIC), denied that any of the five packages the form the project were behind schedule.

It said the project had been “proceeding by leaps and bounds” and was on track to come online in May 2019.

Although the feed pipeline project is key to the operations of the Al-Zour Refinery it is not officially one of the five packages that come under the megaproject’s umbrella.

Development of the pipeline is being overseen by the state-owned upstream operator Kuwait Oil Company (KOC), while the client on the five core Al-Zour refinery packages is KIPIC.

The failure of the Al-Zour refinery to come online as planned would deal a major setback to Kuwait’s downstream strategy as well as the country’s wider economic strategy – as it positions itself to capitalise on rising regional demand for refined products.

The refinery is a key part of KPC’s 2030 strategy to increase growth in the refining and manufacturing sectors.

In February 2017 Kuwait’s Ministry of Finance said that petrochemicals and refineries were the focus of state investments and considered essential to create new jobs and support medium-term refining targets.

Currently Kuwait is targeting a refining capacity of 1.4m b/d by 2020 – a target it will not hit if the Al-Zour Refinery sees major delays and cannot operate at full capacity.

Major delays to the Al-Zour New Refinery Project will also have ramifications for other megaprojects planned in the country, including the planned petrochemicals plant that is due to be built on the Al-Zour site and integrated with the refinery.