Political issues could delay Kuwait refinery

31 March 2008
Kuwait’s landmark new refinery at Al-Zour could be delayed even further, following the resignation of the state’s government and the calling of new elections for late May.

Sources involved in the bidding process for the massive $14.5bn, 615,000-barrel-a-day scheme say that the political situation means the client, state refinery operator Kuwait National Petroleum Company (KNPC), will find it hard to make key contract awards.

“I don’t see how KNPC will be able to award the contracts,” says one of the bidders of the five engineering, procurement and construction packages on offer. “It would be a very brave decision for it to proceed.”

As if to underline this, KNPC has asked bidding firms to extend their bid bonds, which guarantee the validity of their offers, by three months to the end of June. All bidding groups are understood to have agreed to comply with the request.

However, others are more optimistic. “The absence of parliament does not make a difference,” says another contractor. “We still believe KNPC is working towards a mid-April deadline to finalise evaluation and make an award.

More than 15 international contractors submitted bids for the retendered project in December. KNPC has previously said it plans to announce the winners in April, one month later than the original schedule.

The refinery, which is the world’s largest grassroots refinery, has already been delayed by more than a year after bids for the original four contracts came in more than two and half times over budget.

A new government is expected to be appointed within a month of the elections.

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