Kuwait holds talks over Al-Zour refinery

24 February 2010

Petroleum council to make a decision over project by the end of March

Kuwait’s Supreme Petroleum Council (SPC) has met for a second time to discuss the fate of the troubled Al-Zour refinery, according to sources close to the matter.

The SPC met with members of state refiner Kuwait National Petroleum Company (KNPC) on 22 February, according to a senior official at Kuwait Petroleum Corporation. However, no decision has been made over whether to retender the engineering, procurement and construction (EPC) contracts for the construction of the 615,000-barrel-a-day (b/d) heavy oil refinery.

MEED reported earlier in February that the SPC was due to make a decision on the project by the end of March (MEED 16:2:10).

The SPC told KNPC to cancel five EPC contracts to build the refinery in March 2009, after parliamentarians questioned the way the deals were awarded (MEED 16:3:09).

The contracts were awarded a year earlier, although construction work had not begun when the deals were cancelled.

KNPC has been planning to retender the deals since they were cancelled. However, it cannot do so without the SPC’s approval.

The company now hopes to have the project approved as soon as possible to capitalise on a drop of up to 20 per cent in engineering and material costs since early 2009.

Sources close to the project expect KNPC to take 2-3 months to prequalify contractors to bid on construction deals for the project and prepare tender documents, once SPC approval has been given. It will take at least another four months for contractors to prepare and submit bids on the deals.

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