Kuwait waits on approval for refining plans

23 February 2011

Clean Fuel Projects could be tendered in eight packages

Kuwait Petroleum Corporation (KPC) has yet to finalise its tendering strategy as it prepares to launch two of its largest refining projects; the long-awaited Clean Fuels Project (CFP) and the New Refinery Project, which will lift refining capacity to 1.4 million barrels a day.

State-refiner, Kuwait National Petroleum Company (KNPC), a subsidiary of KPC, is now considering breaking the estimated $16bn-plus CFP into eight separate engineering, procurement and construction (EPC) packages, instead of the three originally planned, say sources close to the scheme.

Kuwait Clean Fuels Project
RefineryCurrent capacity (b/d)Planned capacity (b/d)
Mina al-Ahmadi466,000346,000
Mina Abdullah270,000454,000
Fourth Refineryna615,000
Source: KPC

The project will integrate and expand two of Kuwait’s existing refineries – at Mina al-Ahmadi and Mina Abdullah – while retiring the older Shuaiba refinery.

A final decision will be made by the Supreme Petroleum Council (SPC), the highest decision-making body in Kuwait’s oil and gas sector. Abdullah al-Ajmi, manager of the CFP, told delegates at MEED’s Kuwait Projects conference in December 2010 that tenders would be floated six months of final approval (MEED 3:12:10).  

“It was supposed to be approved on Thursday [17 February], but nothing has happened,” says one source close to the project.

The SPC is also due to make a final decision on retendering the 615,000 barrel-a-day (b/d) New Refinery Project (NRP). The original contracts to build the $15bn NRP at Al-Zour in the south of the country were cancelled in 2009 after parliamentarians questioned the way they had been awarded a year earlier.

Contractors hoping to bid on the scheme say there are also doubts about which of the two refining projects will be launched first. Logistically, it will be difficult for Kuwait to handle both at the same time, since they will require between 60,000-100,000 labourers each during the peak of construction.

“The later the better to accommodate manpower needed for the proposal due to heavy workload,” says one source.

Kuwait currently has a refining capacity of 800,000 b/d. With lighter refined products presenting higher value, the CFP scheme will reducing Kuwait’s fuel oil production to 5 per cent of the total refined product mix, from the current 20 per cent and sulphur content from 5,000 parts per million (ppm) to 10ppm.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications