KNPC considers IPO for new refinery

18 May 2006
State refinery operator Kuwait National Petroleum Corporation (KNPC) may stage an initial public offering (IPO) of a 20 per cent share in its planned 615,000-barrel-a-day refinery at Al-Zour. 'We have a directive from the Supreme Petroleum Council to introduce 20 per cent equity in the NRP [new refinery project], and we have a consultant working with us on this,' KNPC chairman and managing director Sami al-Rushaid told the third MEED Major Project Opportunities in Kuwait conference on 15 May. 'An IPO may be too big, but there are other options for local companies or companies listed on the local market.'

Al-Rushaid said that KNPC was also looking at selling an equity tranche to international partners. 'We are not closing it to international participation,' he said. 'We are still looking at international partners and we will be evaluating such joint ventures with the international oil companies. We haven't yet specified the scale of the stake.'

Speaking on the $6,300 million NRP, Al-Rushaid stressed the difficulty in attracting contractors and obtaining the necessary number of skilled and unskilled workers. 'The challenge is to attract EPC [engineering, procurement and construction] contractors without jeopardising strategy and cost,' he said. 'We estimate the NRP will require 25,000 labourers, and we are encouraging local contractors to build up their resources.'

KNPC has made some changes to its contracting strategy for the NRP, including compensating the second and third lowest bidders for each of the four main process packages, and ensuring that the procurement of long-lead items is well-managed and completed early.

For the $4,300 million refinery upgrade programme, to start later this year, KNPC may use a different contracting strategy for the main packages. 'We are considering an alternative contracting strategy for the refineries upgrade,' he said. 'The best case for us is to go lump-sum turnkey, but we may go for the convertible lump-sum turnkey approach.'

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