Kuwait Petroleum Corporation meets on Al-Zour

14 July 2015

The state oil company discusses the future of the delayed refinery project

The board of Kuwait Petroleum Corporation (KPC) is meeting today and will discuss the problems connected to the Al-Zour New Refinery Project, which has an estimated value of around $15bn.

On the agenda is the request from the state downstream operator Kuwait National Petroleum Company (KNPC) to expand the budget for scheme by $2.6bn.

The request for the expanded budget comes after low bids for the scheme’s five unawarded packages came in $3.7bn over budget.

The new refinery is key to Kuwait’s hopes of meeting growing power demand. The 615,000 barrel-a-day (b/d) facility will supply 225,000 b/d of low-sulphur fuel oil for power generation. The scheme will be one of the largest single-phase refineries ever built.

The scheme has been tendered twice before, only to be awarded and cancelled before construction could begin.

A blow to the project was dealt earlier this month when the low bid on a retender of the project’s tankage package came in higher than the original low-bid.

A consortium of Italian contractor Saipem and India’s Essar submitted a low bid of KD475m ($1.57bn) for the tankage package, known as package four.

This is KD68m more than the original low bid of KD407m, which was submitted by the same consortium.

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