Kuwait, Saudi Arabia Strike $19B Refinery Deal - Report
by AFX News Limited
April 10, 2008
Leading OPEC members Saudi Arabia and
Kuwait have struck a deal over the site of a planned oil refinery near their
common border, a Kuwaiti newspaper reported on Thursday.
The deal was reached during talks in Riyadh a few days ago, Al-Rai reported,
quoting unnamed high-ranking industry sources.
Kuwait's Emir Sheikh Sabah al-Ahmad al-Sabah held talks with Saudi Arabia's
King Abdullah on Saturday during a short visit to the kingdom, the world's top
Saudi Texaco, which manages oil on behalf of Saudi Arabia in the divided
zone shared with Kuwait, was reported to have objected to the location of
Kuwait's new refinery in an area known Al-Zour, which is close to the border.
The paper also quoted the sources as saying that Kuwait has raised the
estimated cost of the 615,000 barrels per day (bpd) refinery to $19 billion from
$15 billion, due to an increase in global prices.
When the Gulf state began planning for the project several years ago, it had
earmarked only $6.3 billion.
However, bids by international companies came at more than $15 billion,
prompting Kuwait to cancel the tender and invite new bids on the basis of
cost-plus profit margin.
Faruq al-Zanki, head of the state-owned refiner Kuwait National Petroleum
Co, told the Middle East Economic Survey last month that one of the contracts
was awarded to U.S. engineering firm Fluor.
Other contracts are expected to be awarded later this month, he said.
Kuwait in September prequalified 17 international companies to bid for the
Construction is due to start later this year or early in 2009, with the
refinery set to come on stream by the end of the first quarter of 2012.
Completion was originally planned for 2010.
The new refinery, along with another project to upgrade two of Kuwait's
three existing refineries, would boost the emirate's refining capacity to 1.4
million barrels per day (bpd) by 2012, up from its current 936,000 bpd.
Kuwait sits on about 10 percent of global crude reserves and pumps around
2.5 million bpd.
Copyright 2008 AFX News Limited. All Rights Reserved.
Al Zour Refinery
Kuwait National Petroleum Corp.
Al Zour Kuwait