A technical panel at Kuwait’s Supreme Petroleum Council (SPC) has approved the building of the Al-Zour refinery, also known as the fourth refinery project.

Kuwait now awaits a final decision from the SPC, the highest decision-making body in the country’s hydrocarbons sector, which formulates its general petroleum policy, says a source close to the deal.

[The refinery] will be tendered as a lump sum, so we will know how much it costs when the bids come in

Source close to the project

“They [state-refiner, Kuwait National Petroleum Company (KNPC)] have not heard from the SPC yet, but this is good news for the project”, says the source.

A pronouncement had been expected in March, but the SPC delayed its decision on whether to issue fresh tenders for contracts while it awaited new cost estimates. The council and members of KNPC met in February to discuss the fate of the Al-Zour refinery. State-refiner Kuwait National Petroleum Company (KNPC) also decided not to tender a feasibility study for the refinery as expected (MEED 24:2:10).

The refinery is estimated to cost up to $15bn. “They don’t want to change the budget”, says the source, adding “It will be tendered as a lump sum, so we will know how much it costs when the bids come in”, the source adds.

In March 2009, the SPC forced KNPC to cancel five engineering, procurement and construction (EPC) contracts to build the new 615,000 barrel a day refinery, after parliamentarians questioned the way they had been awarded a year earlier.

If sanctioned contractors say it could take three months to prequalify contractors for the EPC contracts and prepare tender documents. It will take at least a further four months for contractors to prepare and submit bids on the deals.