Kuwait to Invest $14.5 billion

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Kuwait seeks private investors to help build its largest oil refinery after a government council revived the 4 billion-dinar ($14.5 billion) project, which was stalled two years ago due to political opposition.

The Supreme Petroleum Council, the emirate?s highest decision-making body for oil policy, has authorized the plan of constructing of the 615,000 barrel-a-day Al-Zour facility and proposals to existing refineries.

The country is also inviting private investments in the 30.8 billion-dinar development project aimed at infrastructural improvements and modernizes transport links.

The chairman of state-owned Kuwait Oil Co., Sami al-Rushaid, said there is a need for Al-Zour refinery to be reserved for non-government investors. Kamel al-Harami, an independent oil analyst, said that the ministry is also seeking a foreign partner.

Kuwait had initially suspended the project in March 2009 after opposition lawmakers claimed that the leadership did not consult the Central Tenders Committee while awarding the contracts to foreign companies.

The facility may take the form as a public shareholding company, expanding the role of private investors in the country?s economic development.

Phased operation

In the initial phase, the new plant would process 300,000 barrels a day of products for the domestic market. The second phase, refinery would process 315,000 barrels a day. This would replace the output from Kuwait?s oldest and smallest refinery at Shuaiba, which is planned for closure.

The initial plan is to start operation by 2012.

Once the Al-Zour facility becomes fully operational, it will have enough spare capacity to provide products for export.

Kuwait currently imports liquefied natural gas to supply its power stations when demand peaks in the summer months.

Kuwait awarded construction contracts for the refinery in May 2008 to JGC Corp of Japan, GS Engineering & Construction Co. of South Korea, SK Engineering & Construction Co., Daelim Industrial Co. and Hyundai Engineering & Construction Co.

Political disputes

There were political disputes between Kuwait?s legislative and executive members that led to government resignations. This halted several projects. Lawmakers? objections also drove the committee to scrap the joint venture with Dow Chemical Co. (DOW).

According to data compiled by Bloomberg, Kuwait is the fifth-biggest producer in the Organization of Petroleum Exporting Countries, pumping 2.425 million barrels of oil a day. The country?s current refining capacity is 930,000 barrels a day.

The two refineries approved for clean-fuel upgrades, Mina Al-Ahmadi and Mina Abdulla, have output capacities of 460,000 and 270,000 barrels a day respectively. While the third at Shuaiba, can process as much as 200,000 barrels a day.

Early this year in March, Kuwait signed an agreement with China to launch the joint Kuwait – China oil refinery, which is worth US$9 billion. The capacity will be 300,000 barrels per day. The project is built in the city Zianjiang in the province of Guangdong in China. The project contributes to the marketing of Kuwaiti oil in China.

Source: Bloomberg, albawaba.com


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