Low-bid for Al-Zour retender higher than original

09 July 2015

Result may trigger more delays in Kuwait

  • Saipem and Essar bid low with price of KD475m ($1.57bn)
  • This is KD68m more than the original low bid of KD407m
  • A third round of bidding has not been ruled out by contractors

A consortium of Italian contractor Saipem and India’s Essar has submitted a low bid of KD475m ($1.57bn) for the tankage package of the Al-Zour new refinery.

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

According to industry sources, the firms that submitted bids are:

  • Saipem (Italy) / Essar (India) – KD475m
  • Daelim (South Korea) – KD498m
  • Daewoo (South Korea) – KD532m
  • Petrofac (UK) / Hyundai Heavy Industries (South Korea) – KD615m

The official bid list has yet to be announced by Kuwait’s Central Tenders Committee (CTC).

The package is also known as package four and consists of storage tanking, piping and underground works for the planned refinery, which will be built on the Kuwaiti side of the Divided Zone, which is shared with Saudi Arabia.

The fact that the low bid on the retender has come in higher than the original low bid will add to existing problems for the project.

Currently, state-owned downstream operator Kuwait National Petroleum Company (KNPC) is struggling to secure approval for a budget expansion for the scheme from national oil company Kuwait Petroleum Corporation (KPC).

“The fact that the low bid has come in above the KNPC budget means a third round of bidding cannot be ruled out,” says one industry source.

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.

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