Kuwait delays New Refinery Project bid submission deadline

20 August 2014

$1.1bn New Refinery Project package is pushed back by nearly two months

State upstream operator Kuwait National Petroleum Company (KNPC) has extended the bid submission deadline for the engineering, procurement, and construction (EPC) contract for package four of its $14bn New Refinery Project.

The operator has announced that the deadline has been pushed back from Sunday 14 September to Sunday 9 November without giving a reason for the delay.

“It looks like KNPC could be trying to realign the packages,” said one industry source. “If this is the case, then packages one, two and three are likely to keep the same time frame, while four and five might see more extensions.”

Five companies have prequalified for the delayed package, which is worth $1.1bn:

The winning bidder will be responsible for the construction of storage tankage and piping including:

  • five floating-roof tanks
  • 28 fixed-roof tanks
  • two dry slop tanks, each with a capacity of 200,000 barrels
  • two wet slop tanks, each with a capacity of 67,000 barrels
  • a plant fuel oil tank with a capacity of 100,000 barrels
  • a continuous flushing oil tank with a capacity of 10,000 barrels
  • an intermittent flushing oil tank with a capacity of 50,000 barrels
  • four crude pipelines
  • two imported fuel gas lines
  • two low sulphur fuel oil lines

Kuwait’s project to build a new refinery in Al-Zour with a capacity of 615,000 barrels a day (b/d) has a long history of delays. Plans for the project were first announced in 2005. EPC contracts were expected the same year and plant commissioning was set for 2011, but the scheme was delayed due to concerns tied to soaring construction and material prices.

The project’s five packages were retendered in 2007 and a $2.1bn offsites and utilities contract was won by the US project manager Fluor, but due to opposition from parliamentarians who were critical of the tender process, the Supreme Petroleum Council (SPC) decided to cancel all EPC contracts in 2009. At the time of the cancelation, contractors had carried out more than 50 per cent of the engineering work and key long-lead items, including 36 reactors and six vessels, having been placed.

SPC relaunched the project in June 2011 and prequalification for the five major packages was relaunched in the second quarter of 2012.

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