Kuwait Says Plans For Refinery Capacity Boost On Track

Kuwait’s plans to boost refining capacity by over 50 per cent are still on track, a senior oil official said, despite having to extend tenders to build a 615,000-barrel-per-day refinery that has faced delays and political opposition in the past.

Mohammed Ghazi al-Mutairi, chief executive of state-run refiner Kuwait National Petroleum Company (KNPC), said closing dates for tenders to build the country’s fourth refinery, known as al-Zour, have been extended until November 2014 and January 2015 after the companies involved asked for more time.

Japan’s JGC Corp, Britain’s Petrofac, U.S.-based Fluor Corp, and Italy’s Saipem are among 15 firms that have been shortlisted for the Zour refinery, he said.

“We are targeting April 2015 to sign the contracts for al Zour,” Mutairi told Reuters at his office in Kuwait City. “Our plan is to increase our refining capacity to 1.415 million bpd by mid-2019. Today we are at 930,000 bpd, so it is a big jump.”

Al Zour refinery, one of the biggest in the Middle East, is expected to start operations by May 2019 after closing dates for the tenders have been pushed back by few months, he said.

The refinery, estimated to cost around $13 billion, will produce oil products such as diesel, kerosene and naphtha for export and low-sulphur fuel oil for domestic power stations.

Such mega projects are a test for Kuwait, which has struggled to upgrade its infrastructure and attract foreign investors, partly due to political squabbling and bureaucracy.

Kuwait’s plans to upgrade and expand two of its existing refineries, known as the Clean Fuels Project, is also part of the Gulf state’s KD30 billion economic development plan, which has been delayed by politics in the past.

Under the project, the capacity of Mina al-Ahmadi refinery will drop to 347,000 bpd from 466,000 bpd, while Mina Abdulla refinery’s capacity will rise to 454,000 bpd from 270,000 bpd now. The 200,000 bpd Shuaiba refinery will be shut down.

The reduction in the capacity of Ahmadi refinery after shutting one of its crude distillation units will be compensated by adding new units to produce higher value products such as diesel and kerosene for export, Mutairi said.

Details of the contracts, worth around $12 billion in total, were announced in February.

The project is expected to completed by May 2018 and be fully operational by end of 2018, Mutairi said.

Kuwait, one of the world’s biggest crude oil producers, refines about one third of its crude production of 3 million bpd and exports around 660,000 bpd of those petroleum products.