Pipeline contract delays add to doubts over Al-Zour refinery

11 February 2009

The closing date for bids on an engineering, procurement and construction (EPC) contract for pipelines at the planned Al-Zour refinery in Kuwait has been extended by a month, prompting some contractors to question whether the wider project will now go ahead.

The refinery is being planned by Kuwait National Petroleum Company (KNPC). The deadline had previously been delayed by a month to 10 February (MEED 8:1:09).

A notice on the Kuwait Oil Company (KOC) online tendering website shows a new bid deadline of 10 March for the pipeline contract at the fourth refinery, as the project is known.

Contractor sources in Kuwait now say that the entire Al-Zour refinery is in doubt due to political deadlock.

The refinery has been under scrutiny since a parliamentary group called for a review of how a series of contract awards on the project were made in 2008.

“I don’t know if the fourth refinery is ever going to go ahead,” says a source at one international oil company in the country. “The whole country is looking at the parliament at the moment. It [the project] is effectively shut down.”

If it goes ahead, the 615,000-barrel-a-day (b/d) Al-Zour refinery will supply low-sulphur fuel oil to the state's power plants, although some refined product are planned to be exported (MEED 4:1:08).

The award of the pipeline contract had previously been seen by contractors as a sign of good faith that the project would go ahead.

The pipelines will supply crude feedstock to the refinery and the north power plant. The scope for the EPC contract includes the construction of three main oil pipelines, each one carrying a different type of crude as well as fuel oil.

The firms prequalified to submit bids for the EPC contract are SK Engineering & Construction, Daelim Industrial Company and Hyundai Engineering & Construction, all of South Korea, Petrofac, KBR and Bechtel Corporation, all of the US, Italy's Saipem, Paris-based Technip, Japan's JGC Corporation and Japan's Chiyoda Corporation.

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