• Message was conveyed in a letter sent on 23 July
  • The letter was sent after a $2.9bn budget increase was secured
  • The planned Al-Zour facility will be the Middle East’s biggest refinery

Downstream operator Kuwait National Petroleum Company (KNPC) has told Kuwait’s Central Tenders Committee (CTC) to proceed with the contract award process for the Al-Zour New Refinery Project (NRP) packages one, two, three and five.

The message was conveyed in a letter sent on 23 July and was discussed at a meeting of CTC on 27 July, according to a source close to the committee. The outcome of the meeting has yet to be revealed by officials.

The letter was sent by KNPC after approvals for a KD871m ($2.9bn) budget increase for the NRP were secured from both the board of national oil company Kuwait Petroleum Corporation (KPC) and the government agency charged with oversight of the country’s energy sector, Kuwait’s Supreme Petroleum Council (SPC).

The letter did not direct CTC to proceed with the contract award for package four, according to the source, although the award may have been discussed at the CTC meeting. Five packages have yet to be awarded as part of the NRP.

The low bids on the contracts are worth a total of $13.4bn.

KNPC retendered package four in May in an attempt to cut costs and secure a lower price, but the retender produced a low bid that was KD68m more than the original low bid of KD407m.

The Al-Zour scheme is part of a plan to overhaul the country’s refining sector, slash the sulphur content in its fuels and lift its refining capacity from 930,000 barrels a day (b/d) to 1.4 million b/d by 2020.

The project will involve the construction of a 615,000-b/d refinery on a greenfield site in the Divided Zone, which is shared with Saudi Arabia and has a long history of delays and setbacks. If the refinery is executed as planned, it will be the biggest refinery in the Middle East.

Since it was first announced in 2005, the NRP has been tendered three times. Contracts were awarded on the second occasion, but were cancelled by the SPC before construction began.

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