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Kuwait signs $12b in mega-deals Zour up by ’18

KUWAIT CITY, April 13, (Agencies): The Kuwait National Petroleum Company on Sunday signed contracts worth $12 billion (nine billion euros) with three international consortia to upgrade two refineries and invited bids to build a new multi-billion-dollar refinery.

State-owned KNPC’s chief Mohammed al-Mutairi signed the contracts with the three consortia led by Britain’s Petrofac, US Fluor and Japan’s JGC Corporation. Most of the other companies in the consortia are South Korean. Mutairi said the Al-Zour Refinery project is due to be completed in early 2018.

The cost of the venture — called the Clean Fuel Project — is more than $13 billion if smaller preparatory contracts are added, lower than the previous estimated cost of $16.4 billion, project manager Abdullah Al-Ajmi told AFP. The contracts, the first mega project in the OPEC member’s vital oil sector for 25 years, will upgrade two of the three existing refineries by installing 37 advanced processing units that will reduce sulphur and carbon pollutants, Mutairi told reporters.

The current production capacity of the two refineries of Mina Al-Ahmadi and Mina Abdullah is around 730,000 barrels per day, while the capacity of Kuwait’s third refinery at Shuaiba is 200,000 bpd.

At the end of the project, the capacity of the two refineries will increase to 800,000 bpd, while Kuwait plans to shut the third refinery. KNPC on Sunday began inviting bids for two of the five-package project to build a state-of-the-art refinery with a capacity of 615,000 bpd, project manager Khaled al-Awadhi told reporters. The two tenders are for marine works and storage tanks.

Next month, the company will tender the three main packages for building the body of the refinery, said Awadhi, adding that KNPC hopes to award all the five contracts in the first quarter of next year. The refinery, estimated to cost around $15 billion, is slated to come onstream in between the end of 2018 and the first quarter of 2019, Awadhi said. Kuwait’s refining capacity will reach over 1.4 million bpd from the current level of 930,000 bpd, when the projects are completed. Most of the production will be for export to Asian and European markets, he said.

The two projects have been repeatedly delayed because of political disputes between parliament and the government. The project to build a new refinery was scrapped by the government around five years ago, after five Japanese and South Korean companies were awarded con-tracts. Lawmakers had opposed the plan complaining of a lack of transparency in the tendering process, but they have not raised objections to the new contracts.

Royal Dutch Shell and BP have signed deals to supply Kuwait with liquefied natural gas (LNG) over the next few years, a Kuwait Petroleum Corp. (KPC) official was quoted as saying on Sunday. Kuwait began importing LNG in 2009 and signed deals for Shell and Swissbased trader Vitol to supply it during the peak power demand period from April to October over the last four summers. Jamal Al-Loughani, deputy director of marketing at KPC, told the Kuwaiti Al- Seyassah newspaper that Shell and BP have been contracted to supply the OPEC member country over the next 5-6 summers.

He said the total volume of supercooled gas to be delivered between the two companies would be around 2.5 million tonnes a year. Kuwait will sign another contract to buy LNG from a third company later this week, he said, without elaborating. Surging air conditioning demand in the hot Middle Eastern summer and a lack of domestic supply means Kuwait needs to import more gas each year to feed its power plants.

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