Kuwait signals it will go ahead with multibillion-dollar petrochemical facility

10 February 2016

State oil firm says it is setting up a company to manage refinery integration

State-owned Kuwait Petroleum Corporation (KPC) is preparing for the integration of its planned Al-Zour New Refinery Project with a large petrochemical facility.

KPC is planning to set up a new company to manage the integration of the two facilities, according to the chief executive of KPC, Nizar al-Adsani, who spoke to the state news agency KUNA.

The new company will also manage the integration of a liquefied natural gas (LNG) terminal that is slated to be built in the Al-Zour area, according to Al-Adsani.

Al-Adsani’s comments come after months of uncertainty over whether a petrochemical facility would be integrated with the Al-Zour New Refinery Project.

Kuwaiti revived plans for Olefins 3, a multibillion-dollar petrochemicals plant in the Al-Zour area, in October 2014 when UK-based consultancy KBC Advanced Technologies was hired to carry out an initial feasibility study for the scheme.

This feasibility study saw a series of delays over 2015.

“For a long time it was uncertain whether KPC would commit to building the new facility and integrating it with the refinery,” said one industry source.

“The latest announcement is a positive signal. It looks like KPC is ready to proceed with the petrochemical project and it will be integrated with the Al-Zour refinery.”

The petrochemical project is estimated to be worth between $5bn and $10bn.

Al-Adsani did not give details on the timeframe or budget for the petrochemicals project.

In 2011, PIC said the Olefins 3 cracker would use a mixed feed of gas and liquids.

Under the original plans, the complex was slated to produce 1.4 million tonnes a year (t/y) of ethylene, 450,000 t/y of linear low density polyethylene and high density polyethylene, along with 600,000 t/y of glycols.

These figures are now out of date and the mix of products produced is likely to be changed in light of the feasibility study being carried out by KBC, according to sources close to the project.

During the bidding stage of the Al-Zour New Refinery Project contractors were warned by state downstream operator Kuwait National Petroleum Company (KNPC) that plans may change in the execution phase due to the integration of the petrochemicals facility.

The Al-Zour New Refinery Project will see a 615,000 barrel-a-day (b/d) facility constructed in the Al-Zour area near Kuwait’s border with Saudi Arabia.

Contracts for the project’s five packages were signed in October 2015. The contracts were worth $13bn.

A consortium of South Korea’s Hyundai Engineering and Hyundai Engineering & Construction (E&C) is low bidder on KNPC’s planned liquefied natural gas (LNG) import terminal, which will also be managed by the new KPC company.

The LNG import terminal will be integrated with the Al-Zour Refinery’s marine facilities, which include a docking area for boats.

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