Kuwait increases refinery budget

Increases budget of planned refinery from US $5 billion to $6.3 billion so that it can include extra capacity.

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By  J Shankar Published  August 17, 2005

Kuwait has raised the estimated cost of its new oil refinery to more than US $6.3 billion, from the original figure of $5 billion, to increase the capacity of the planned facility. The increase is aimed at raising capacity to more than 600,000 barrels per day (bpd) from the initial 460,000 bpd and to allow the use of state-of-the-art technology, said project manager, Ahmad Al Jeemaz. “A reason for the rise is also the recent increase in the prices of raw materials to be used in the construction of the refinery,” he said. Around eight international firms are believed to have entered the bidding for the contract to build the refinery. Kuwait National Petroleum Company (KNPC), which has responsibility for the country’s refineries, initially invited firms to apply for pre-qualification. If they pass this hurdle, they will then be allowed to bid for the contract to build the refinery. The new plant will replace the ageing 200,000 bpd Shuaiba refinery, which is scheduled to be shut down by 2010. The Shuiba refinery was the first refinery built by the national oil company, Kuwait Petroleum Corporation (KPC), in the region, in April 1968. A $36.9 million contract aimed at keeping Shuiba running efficiently until its planned closure was awarded last month to Kuwait’s Heavy Engineering Industry and Shipbuilding Company (HEISCO). “The tender is for developing a safe, clean environment and revamping boilers and furnaces at the Shuaiba refinery,” said a statement. An official in the new refineries section of KNPC told Oil&Gas Middle East that the bids for the new refinery were due to be submitted by August 8. The plant will produce low-sulphur fuel oil to be used in Kuwait’s water and electricity generating plants. The completion of this project, together with another project for developing the existing oil refineries in Ahmadi and Abdullah, will take the country’s total oil refining capacity to between 1.2 and 1.3 million bpd. KNPC said the new facility will include over 15 process units plus buildings, utilities, and offsite facilities. The company anticipates the work will be executed using not more than three EPC contractors. Last month, KNPC engaged the services of US-based Fluor as the overall project manager, responsible for overseeing its execution and serving as the front end engineering design (FEED) engineer. KNPC is one of eight subsidiaries of Kuwait Petroleum Corporation, which overseas Kuwait’s upstream and downstream energy sector. KNPC currently runs three refineries with a combined maximum capacity of 930,000 bpd. Kuwait produces around 2.6 million barrels of oil per day and has ambitions to raise that figure to four million. It has stated reserves of 99 billion barrels.

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