Kuwait's government will cancel a $15 billion oil refinery project, which met opposition in parliament, in its weekly meeting on Monday, the country's prime minister said in remarks published on Sunday.
The refinery would be the second multibillion-dollar oil project to be scrapped in about three months after meeting parliamentary opposition.
"We will officially stop the project in the coming cabinet meeting," Prime Minister Sheikh Nasser al-Mohammad al-Sabah was quoted as saying by al-Watan newspaper.
The cabinet had asked the finance watchdog Audit Bureau to look into the project after some lawmakers raised concerns about it and warned the government against signing final contracts.
Sheikh Nasser told al-Watan the government is committed to adopting the findings of the bureau's report.
The report was not made public but according to local media it concluded that the project was not feasible.
In May, state refiner Kuwait National Petroleum Co (KNPC) awarded deals worth $8.4 billion to four South Korean firms and one Japanese firm for the 615,000 barrels per day al-Zour refinery with more to be awarded later. Final contracts were not signed.
A KNPC spokesman had no immediate comment on the report.
A top official of state-run Kuwait Oil Company (KOC) said he had not heard of any plans to cancel the project.
"I certainly hope the project goes on because it is such a vital, strategic and environmental project," Sami al-Rushaid, KOC's chairman and general manager, told Reuters on the sidelines of a conference in Bahrain.
A Kuwaiti oil official, who spoke on a condition of anonymity, said the Supreme Petroleum Council, the Gulf Arab state's top energy body which is headed by the prime minister, was not informed yet of such a decision.
REFINING CAPACITY
"If the government will cancel the fourth refinery, it has to reconsider now upgrading all of its refineries ... We can't close Shuaiba refinery, we have to keep it," said the official.
"Some members in the Supreme Petroleum Council did not approve the refinery project because it was not an investment project, but it was passed by majority of votes."
Kuwait had plans to boost refining capacity to 1.415 million bpd from around 930,000 with the new al-Zour plant and upgrades to two other refineries. The new plant was to replace the country's aging 200,000 bpd Shuaiba plant.
KNPC awarded a package worth $4 billion to build crude distillation units to a consortium of JGC Corp of Japan and GS Engineering and Construction Corp of South Korea.
It awarded a $2 billion project to build hydrogen production units to SK Energy of South Korea, while South Korea's Daelim Korea won a $1.2 billion project to set up storage tanks.
Hyundai Engineering of South Korea won a $1.1 billion project for marine export facilities in May.
The project, which was managed by U.S. company Fluor Corp , has been facing opposition from several deputies, who alleged there were violations, particularly in handing out a package to Fluor without a tender.
Some deputies threatened to question former oil minister Mohammad al-Oliam if he went ahead with signing the contracts.
The government bowed to pressure and asked the Audit Bureau to probe whether the tender process showed irregularities.
In December, Kuwait scrapped a $17 billion joint venture with U.S. group Dow Chemical just a month after signing the deal, saying it was no longer viable in light of the global crisis after parliament opposed the deal.
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