Kuwait to look at integrating Al-Zour with chemicals plant

30 May 2008
Expansion of gas output will provide an opportunity to increase scope.

Kuwait will consider integrating its new 615,000-barrel-a-day refinery at Al-Zour with a massive petrochemicals complex if the refinery is changed to produce a full range of products.

The $15bn Al-Zour refinery, which is currently under construction, is primarily geared towards providing fuel oil for the state’s power plants. However, the discovery of the state’s first non-associated gas reserves in 2006 has since led to hope that Kuwait will be able to use gas for power generation instead, enabling Al-Zour to produce other products.

“If [gas] feedstock becomes available for our power plants, Al-Zour could be converted to a full conversion refinery,” says Maha Hussain, chairman and managing director of Petrochemical Industries Company (PIC), the refining arm of Kuwait Petroleum Corporation (KPC). “If that is the case, we are thinking of linking it with a petrochemicals plant. In our masterplan, we see this as an opportunity.”

The first non-associated gas is due to be produced by state upstream operator Kuwait Oil Company (KOC) in June. The first phase will produce 175 million cubic feet a day (cf/d) of gas. It is starting two months later than planned because of poor winter weather, which delayed work.

The first condensate production from the plant, of 50,000 barrels a day (b/d), began on 26 May.

KOC’s plan calls for gas production to increase to more than 1 billion cf/d by 2016 (MEED 11:4:08).

Kuwait is already planning several new petrochemicals ventures. Hussain says the state is looking at a further expansion of its Equate Petrochemical joint venture with the US’ Dow Chemical Company, to follow the Olefins I and Olefins II projects. “Of course, we are looking at Olefins III,” she says. “We are waiting for gas to be produced and the next [second] stage of increasing gas production.”

Dow and PIC are also optimistic that they will complete a separate $11bn joint venture agreement by the end of the year. The new company, announced last year, will produce and market polyethylene, ethylenamines, ethanolamines, polypropylene and polycarbonate.

As part of the agreement, PIC will buy a 50 per cent share in five of Dow’s global businesses for $9.5bn (MEED 13:12:08). “We are looking for the end of the year [to complete the deal],” says Hussain. “We have a vision to become a global player in the petrochemicals sector and also in the sense of production, owning technology and increasing market share. Our strategy is based on partnership.” Dow is equally confident. “Our intent is to close the deal by the end of the year and we are heavily in discussions right now,” says Mike Gambrell, executive vice-president of basic plastics and chemicals, manufacturing and engineering at Dow.

“We have a long-term relationship with PIC already in Kuwait, and so what we are going to do is take that relationship and their feedstocks and our know-how and put it together in a venture and develop a growth platform.

“In the short term, it is not going to help the mature geographies because those assets are already in position, but what we are looking at is the growth side of this thing. They bring the oil side, we will optimise. We will build refineries around that and optimise around petchem. That is the goal.”

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