Kuwait turns to Shell to renovate aging refinery

State refiner Kuwait National Petroleum Company (KNPC) said on Tuesday it had contracted Royal Dutch Shell to improve the performance of its ageing Shuaiba refinery, which has been hit by several accidents.

The 200,000 barrels-per-day (bpd) Shuaiba refinery, one of three in the Gulf Arab state, has seen a string of incidents temporarily affecting production, including a fire in January after a gas leak and a blast in November.

Shell's Global Solutions business would review Shuaiba's administration and technical systems and would assist with maintenance for 18 months, said Hussein Ismail, the refinery's deputy managing director.

"They will take a fresh look at our systems," he told an oil conference. "They will look at our maintenance practices and compare it with international standards. We're going to apply their recommendations."

Ismail also said the refinery wanted to lower costs to prepare for oil prices coming off current high levels, but he gave no details. "We need to squeeze our expenses," he told reporters.

Kuwait has said it wants to close Shuaiba after the expected construction of the 615,000 bpd Al-Zour refinery at the end of 2011, for which the world's seventh-largest oil producer is currently tendering.

The Gulf Arab state's smallest refinery said in late May it had shut down a 52,000 bpd heavy-oil unit for unscheduled maintenance lasting 3-4 weeks.

Ismail said the next planned general maintenance with a total shut down would be in 2011. Shuaiba had its last scheduled maintenance in May 2006, involving the crude distillation unit, as well as kerosene, diesel and gasoline production and some auxiliary units.

Kuwait has a crude distillation capacity of up to 930,000 bpd from its three refineries.

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