Olefins 3 integration adds uncertainty to New Refinery Project

09 October 2014

Project merger sparks concerns about further delays

The integration of Kuwait’s Olefins 3 petrochemicals plant with the $14bn Al-Zour New Refinery Project (NRP) is intended to increase efficiency, but many observers have raised concerns that combining the two projects could lead to complications and, ultimately, more delays for a project that has already seen major setbacks.

Deadlines for engineering, procurement and construction (EPC) bids for some of the NRP’s biggest packages are approaching fast.

Bids are due in on 9 November for packages four and five, but until recently, the contractors were unaware of the possibility that the petrochemicals plant could be integrated.

The newly announced merger raises questions about just how integrated the two facilities can be, given that the EPC proposals are already being finalised.

If a high level of integration is to be achieved, then plans may have to be changed and deadlines extended.

The NRP has already seen extensive delays since it was first planned in 2004, and has even been tendered twice before.

Five EPC contracts were awarded in 2008 by Kuwait National Petroleum Company (KNPC), and long lead-time items were delivered, including six separators and 36 reactors for the planned atmospheric residue desulphurisation units.

Before construction started, however, the deals were cancelled in 2009 on the instructions of Kuwait’s Strategic Planning Centre (SPC) amid concerns over how the contracts were awarded.

The separators and reactors remain in storage in the Shuaiba industrial area.

Renewed momentum on the NRP over recent years has helped international oil companies (IOCs) and EPC contractors regain some confidence in Kuwait’s ability to draw a line under previous setbacks and start pushing forward with major construction projects.

If signs emerge that complications from the integration of Olefins 3 is causing new delays for the Al-Zour refinery, this confidence will be quick to evaporate.

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