Fluor wins $2bn deal to build part of Kuwait’s Al Zour refinery project

Kuwait has awarded construction of part of a planned 615,000 barrels per day refinery to United States engineering firm Fluor, the head of the state-owned refiner told the Middle East Economic Survey (MEES).

The Fluor contract, covering utilities and offsite facilities, is worth $2 billion  (Dh7.34bn) out of the projected total cost of around $15bn, Faruq Al Zanki, chairman of Kuwait National Petroleum Co (KNPC) said.

The remaining contracts will be awarded in late April, he told the March 31 edition of the Nicosia-based industry newsletter.

Top oil executives had said the contracts would be awarded in late March.

Kuwait in September prequalified 17 international companies to bid for the refinery after scrapping the first round of tenders because of inflated cost estimates. The planned facility will be south of Kuwait City in the Al Zour area near the Saudi border.

The new contracts will be based on a cost plus profit margin, which means Kuwait paying the cost of the project to the successful bidder plus an agreed profit.

Construction is due to start later this year or early in 2009, with the refinery due to come on stream by the end of the first quarter of 2012. Completion was originally planned for 2010.

KNPC is also planning a multi-billion-dollar project to expand and modernise two of its three refineries, at Al Ahmadi and Mina Abdullah, but the project is running behind schedule, Zanki told MEES.

The award of contracts is expected in late 2008, he said.

The project, dubbed Kuwait Clean Fuel, will raise the two refineries’ production from just over 700,000 bpd to 800,000 bpd.

When the project is completed in 2012, Kuwait’s third refinery at Shuaiba will be closed.

This would leave the emirate with a refining capacity of 1.4 million barrels per day (bpd) by 2012, up from its current 936,000 bpd.

The Gulf state of Kuwait sits on about 10 per cent of global crude reserves and pumps around 2.5 million bpd. (AFP)