Construction costs to delay Kuwait’s al-Zour oil refinery

The start-up of Kuwait’s al-Zour crude oil refinery is expected to be delayed after rising construction costs forced state refiner Kuwait National Petroleum Co (KNPC) to seek more money to finance the plant, a KNPC spokesman said on Monday.

Officials had previously said start-up would occur by late 2018 or early 2019 and pegged the cost of the facility at 4 billion dinars ($13.3 billion).

But KNPC spokesman told Reuters by telephone: “We are seeking additional funds to start awarding (contracts). We are already two months behind and we don’t know when we will get the funds.”

KNPC said in a statement that a request for the new government money would be submitted to the Supreme Petroleum Council, a top oil policy body.

The company did not say when the request might be approved or how much extra money KNPC needed, but Kuwaiti daily al-Seyassah quoted the company’s chief executive Mohammed Ghazi al-Mutairi as saying the amount was estimated at 800 million dinars.

The 615,000 barrel per day oil refinery, originally planned more than a decade ago, would be the biggest in the Middle East, but the project has been repeatedly delayed by bureaucratic and political issues, including tensions between Kuwait’s parliament and the cabinet.

KNPC said it had asked companies which had bid for work on the project to extend the validity dates of their bids until it obtained the new funds.

Bids for one of the contracts, related to the tank farm, did not meet specifications so the company is inviting fresh bids and set July 7 as the date for them to be submitted.

The refinery will make diesel, kerosene and naphtha for export and low-sulphur fuel oil for domestic power stations.