Prequalified contractors for the construction packages on the state’s 615,000-barrel-a-day (b/d) grassroots refinery at Al-Zour will not be able to form groups of their choosing, according to state refinery operator Kuwait National Petroleum Company (KNPC).

‘We don’t want the big players teaming up for one package,’ says executive assistant to the managing director for projects Hatem al-Awadi. ‘We won’t allow [Paris-based] Technip to join [US-based] Bechtel, for example, but we will allow Technip to bid with [South Korea’s] SK Engineering & Construction. This way we can ensure that bidding for each of the three-five main packages is competitive.’

Between 20-25 companies are expected to be prequalified for the estimated $6,300 million grassroots scheme, which will be the largest refinery in the region. Prospective prequalifiers include: JGCCorporationand Chiyoda Corporation, both of Japan; Italy’s Snamprogetti; Bechtel; Technip; and SK, GS Engineering & Construction, Hyundai Engineering & Construction Companyand Daelim Industrial Company, all of South Korea (MEED 21:10:05).

‘We are finalising the prequalifiers list,’ says Al-Awadi. ‘We are going to meet [US-based] Fluor Corporation[the project management and front-end engineering and design contractor] in mid-November and come out with the approved list of contractors shortly after. If we have enough good contractors, which can take on EPC [engineering, procurement and construction] contracts greater than $2,000 million, then we will go for fewer packages. We hope to award the contracts by December next year.’

The refinery is aimed at producing fuel oil for the state’s rapidly growing power generation requirements, although it can become export-oriented if Kuwait reaches a gas supply deal with one of its neighbours. ‘The main objective in building the refinery is to provide low-sulphur fuel oil to the Energy Ministry, but we can switch this to export if gas comes in,’ says Al-Awadi. ‘Do I think the gas supply deals will be reached soon? Yes, I think we will reach a deal with Iran shortly.’

Progress is also being made on the $4,100 million refinery modernisation and upgrade programme at the state’s three existing refineries at Mina Abdulla, Mina al-Ahmadi, and Shuaiba. ‘The budget is soon going to be approved, with the first KD 250 million [$862 million] for the procurement of long-lead items already approved in principle,’ says Al-Awadi. ‘We are considering awarding the various packages on a cost-reimbursable basis.’

Plans are also taking shape for a fourth gas fractionation train, and upgrade to sulphur handling and ship-loading facilities at Mina al-Ahmadi. ‘We need these facilities to prepare for Dorra’s offshore gas,’ says Al-Awadi. ‘I think there is a lot more gas to come.’

At least nine EPC contractors attended a meeting with KNPC in early September to discuss the contracting strategy on the fourth liquefied petroleum gas (LPG) plant, which would have the capacity to process 550 million cubic feet a day through gas compression, acid gas removal, gas drying, pre-cooling and fractionation. Talks centred on whether to tender the estimated $600 million-700 million contract on a lump-sum turnkey (LSTK) or cost reimbursable basis (MEED 16:9:05).