State-owned downstream operator Kuwait National Petroleum Company (KNPC) is considering a number of options, including retendering, after bids for the marine package of the $14bn Al-Zour New Refinery Project came in 80 per cent over budget.

“There are many permutations of possibilities currently being voiced,” a source close to the tendering process told MEED.

Aside from retendering, the options being weighed by KNPC include changing the scope of the project, and negotiations with bidders to find out whether risk or pricing can be modified to reduce the project’s cost.

The current budget for the marine package, also known as package five, is based on a scope from 2007 and does not fully take into account some of the changes to the project or increases in labour and materials costs, according to sources close to the scheme.

Bids are due in for the Al-Zour Refinery packages one, two and three on 8 March.

Sources close to the tendering process say it is likely that KNPC officials will consider look at the pricing of these packages before they make a decision on how to proceed with package five.

“One, two and three are to be returned to CTC [the Central Tenders Committee] on 8 March. Even if these are low [compared with its] budget estimate, then package five [still] has to be treated… as a standalone [package]… and will need to be addressed,” said once source.

The contract for package five is scheduled to be awarded in early May, but insiders are expecting delays due to the ongoing debate about pricing.

The low-bidding consortium on the marine package is a consortium comprising South Korea’s Hyundai E&C, Italy’s Saipem, and India’s Essar, met CTC officials on 11 February.

If the low-bidding consortium wins the contract, it will be responsible for the construction of a harbour, including a sulphur pelletising and conveying system, subsea outfall lines and an offshore island capable of birthing tankers.

The full bidders list on package five is:

• Hyundai E&C / Saipem / Essar, KD454m ($1.55bn)
• GS Engineering and Construction (South Korea), KD459m ($1.56bn)
• Daelim Industrial (South Korea), KD720m ($2.45bn)

Follow Wil Crisp on Twitter: @bilgribs