Three consortiums have emerged as the low bidders for the three engineering, procurement and construction (EPC) packages that make up Kuwait’s Clean Fuels Project (CFP), with bids totalling almost $12bn.

Bids were submitted to the Central Tenders Committee (CTC) on 24 December by five separate consortiums. The three lowest bidders are:

• Mina al-Ahmadi – $4.8bn: JGC Corporation (Japan)/SK Engineering & Construction (South Korea)/GS Engineering & Construction (South Korea)
• Mina Abdullah 1 – $3.74bn: Petrofac (UK)/Samsung Engineering (South Korea)/CB&I Lummus (US)
• Mina Abdullah 2 – $3.4bn: Fluor Corporation (US)/Hyundai Heavy Industries (South Korea)/Daewoo Engineering & Construction (South Korea)

The client for the scheme is state refiner Kuwait National Petroleum Company (KNPC) but the tendering process is being handled by the CTC.

“This is a very high-value project and all of the packages are worth several billion dollars each,” says a source from a major EPC contractor. “All of the lowest bidders will be hoping KNPC put pen to paper sooner rather than later.”

The deals are expected to be signed in the first quarter of 2014 and the sums involved represent some of the largest packages ever awarded to contractors in the region. The $4.8bn package eclipses even the $3.7bn deal handed to Petrofac and Daewoo E&C’s by Abu Dhabi for the development of the offshore Upper Zakum field.

The CFP has been designed to revamp three of Kuwait’s existing refineries to improve their efficiency and meet higher international fuel standards.

The scheme involves upgrades and expansions of the Mina al-Ahmadi and Mina Abdullah refineries to increase their combined capacity to 800,000 barrels a day (b/d), from 736,000 b/d currently. The Shuaiba refinery, which sits between the two, will be retired as its rehabilitation has been deemed economically unfeasible.

MEED reported in mid-2013 that the CFP deadline had been pushed back to December from the original date in November to give the bidders more time to formulate proposals.

The CFP has been in development since 2007 and has suffered several long delays brought about by numerous factors. These include bureaucracy and the tense relationship between the government and parliament, as well as the global economic crisis of 2009 that ground almost every project in Kuwait to a standstill.

The scheme was finally granted approval to proceed by the Supreme Petroleum Council (SPC), the country’s highest hydrocarbons policy body, in mid-2011.

The US’ Foster Wheeler was awarded the project management consultancy in December 2012 and several smaller schemes have been initiated during the past 12 months in readiness of the three largest packages entering execution.

These include a $240m deal between KNPC and Germany’s Siemens to provide high-voltage substations that will provide power for the electrical drives and auxiliary systems for the contractors working on the CFP.

The CFP is expected to be the turning point for Kuwait’s hydrocarbons sector, which has had a turbulent 12 months.

In May, Kuwait decided to dispense with the services of almost all of its upper management tier, including the oil minister and the vast majority of chief executive officers (CEOs) and managing directors.

The trigger for the reshuffle was most certainly the recent move by the International Chamber of Commerce (ICC) to award the US’ Dow Chemical $2.19bn in damages relating to the collapse of the $17.4bn K-Dow Petrochemicals joint venture in December 2008.

With the CFP now starting to really find momentum international contractors are now anticipating the much-delayed $15bn New Refinery Project (NRP) in 2014.

The NRP has now been in the planning stages since 2004, but there is real optimism now that it will begin to move in the next 12 months.

The scheme involves the construction of a 615,000 b/d refinery at Al-Zour in the south of Kuwait. The new facility would be the largest refinery ever built in a single phase and is intended to supply low-sulphur fuel oil for power generation across the country.