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02 October 2023

Kuwait may re-tender Al-Zour refinery package 4

Negotiations on with the lowest bidder, Saipem of Italy. (File)

By Staff

Kuwaiti National Petroleum Company (KNPC) is considering re-tendering package 4 in its giant Al-Zour refinery project if negotiations with the lowest bidder, Saipem of Italy, over risk premium fail, KNPC’s deputy CEO was quoted on Monday as saying.

“We are negotiating with Saipem which has made the lowest bid for package 4…we need to revise the bid’s part concerning risk premium because we consider it costly and we will not accept the bid if differences between the bidder and the central tenders committee persist,” Hatem Al-Awadi told Kuwait’s Arabic language daily 'Al Rai'.

He said state-owned KNPC has two options — either to revise the bid or re-tender the package, adding:”The problem is that there is a big price gap of 90-100 million dinars (310-345 million dollars) between the first and the second bidder.”

Awadi did not elaborate on package 4 but KNPC officials said last year it involves building oil tanks and pipelines for the 11.5-billion-dollar refinery in south Kuwait.

He also did not specify Saipem’s bid or the expected costs of package 4 but KNPC has estimated the combined cost of packages 4 and 5 at around 1.1 billion dollars.

Awadi also told the paper that KNPC hopes to close bids for package 1,2 and 3 on March 8 if bidding prices are close to the budget allocated for those projects.

He confirmed that KNPC and the tenders committee are studying re-tendering package 5 which involves construction of an export terminal and other marine facilities in a bid secure lower prices following a sharp drop in global crude prices.

Gulf OPEC oil producer Kuwait has been locked in a massive programme to expand its refining sector to diversify its economy and exploit its enormous crude deposits, estimated at 101 billion barrels.

The programme involves building the 615,000-bpd Al-Zour refinery and expanding the two existing refineries to double the emirate’s total refining production to nearly 1.4 million bpd in four years.