Tenders Finally Released for Kuwait’s $6.3 Billion Oil Refinery

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Researched by Industrial Info Resources (Sugar Land, Texas). April 2006 will see the issuing of four invitations to tender for Kuwait’s major new oil refinery. This was announced by KNPC (Kuwait National Petroleum Company) in the third week of March. The project specifications have been undergoing modifications and adjustments in the size of proposed output and of the total project investment over the past year. The final profile of the refinery is 600,000 barrels per day (bpd) of output with an investment of $6.3 billion. The refinery will be constructed in the Al Zour area, which is 100 kilometers south of the country’s capital of Kuwait City.

Two tenders will be issued for the manufacturing units. There will a third covering utilities and services and a fourth tender will be for storage tanks and a pier. For related news item see December 29, 2004 – Fluor at the Front End of Kuwait’s Billion Dollar refining and Petrochem Projects.

The country’s three operating refineries at Al Ahmadi, Mina Abdullah and Shuaiba have a combined refining capacity of 915,000 bpd. When the new refinery comes on stream, the Shuaiba refinery will be closed, leaving Kuwait with a total refining capacity of 1.4 million bpd. Currently, Kuwait has a production capacity of 2.6 million bpd and is estimated to hold 10% of the world’s proven oil reserves. KNPC will invest $3 billion into modernizing the Al Ahmadi and Mina Abdullah sites by 2011.

Looking to add value to the oil reserves, Kuwait is also putting into effect major plans for downstream petrochemical production. Work started on the construction of the $3.5 billion olefins and aromatics plants in 2005. The complex is being built by a joint venture between PIC (Petrochemical Industries Company), which is the petrochemical division of KNPC and Dow Chemical (NYSE:DOW) (Midland, Michigan). The country’s energy minister, Sheikh Ahmad Al Fahd Al Sabah, has said that Kuwait will be among the leading countries in the global industry.

The new complex that is under construction in the Shuaiba coastal area is scheduled to go into production in 2008. Olefins II will have a 850,000 tons per year (tpy) ethane cracker and a world-scale 600,000 tpy ethylene oxide/ethylene glycol plant. The complex’s site is adjacent to the EQUATE complex, which is a PIC joint venture with Dow Chemical/Union Carbide established in 1995. The latter’s current 600,000 tpy polyethylene production capacity will be expanded by 300,000 tpy to use the additional ethylene coming from Olefins II.

There are also project plans for the joint venture to build an ethylbenzene/styrene unit with a 450,000 tpy capacity, which will also receive its ethylene feedstock from Olefins II. The benzene will come from the $500 million paraxylene and benzene projects scheduled for construction at Shuaiba adjacent to EQUATE by SK Engineering (Seoul, South Korea) for PIC. Construction is scheduled to start at the end of 2006 and be complete by March of 2009. EQUATE will manage, operate and maintain the Olefins II facilities

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