Kuwaits Supreme Petroleum Council has cancelled the tender for the feed pipelines supplying crude to the new refinery at Al-Zour.
The council took a unanimous decision to cancel the tender after all points of view were heard and alternatives discussed, Kuwaiti oil minister Essam al-Marzouq was quoted as saying by Kuwait News Agency.
Operations will be sustained at Al-Zour through current pipelines with South Al-Zour and Al-Ahmadi refinery, he added.
MEED reported that state upstream operator Kuwait Oil Company (KOC) had submitted a request to retender the project, after allegations of corruption among contractors surfaced.
The Council of Ministers was opposed to the award of the project to Dodsal Group, which had submitted the lowest bid of $868m, accusing the UAE-based engineering group of delaying work it had undertaken in the country.
The construction of the 250-kilometre pipeline to supply crude to the 615,000 barrel-a-day Al-Zour refinery was tendered in 2014. Indias Larsen & Toubro submitted the lowest bid of KD230m ($753m) and then withdrew from the tender citing the failure of its local partner Joint Scientific Group to extend its bank guarantee.
KOC had requested a retendering of the project in 2014, however the Central Tenders Committee (CTC) rejected the request leaving the next lowest bidders Dodsal as well as Petrofac in running for the project.
In January, the CTC website indicated that Dodsal had been chosen as the lowest bidder to execute the project. An executive with the engineering firm had earlier told MEED that the possibility of a retender had been ruled out.
The feed pipelines package is the last phase of the estimated $17bn New Refinery Project, which was commissioned by downstream operator Kuwait National Petroleum Company to produce low sulphur fuel oil by processing heavy crude.
Dodsal had previously been awarded KOCs effluent water and injection plant in north Kuwait, worth an estimated $946m as well as the $809m Gathering Centre 31. The water injection plant, is set for completion in June 2018, while the gathering centre is set to be completed by July 2017, according to MEED Projects.