Kuwait continues with oil refinery despite probe

CONTRACT PROBE: Kuwait is going ahead with plans to build the giant Al-Zour oil refinery despite a probe by deputies into some contracts. (Getty Images)

Kuwait is going ahead with plans to build the giant Al-Zour oil refinery despite a probe by deputies into some contracts of the $15 billion project, the Gulf Arab state's oil minister said on Wednesday.

State refiner Kuwait National Petroleum Co (KNPC) in June awarded deals worth $8.4 billion to four South Korean and one Japanese company with more work to be awarded at some stage later.

A parliamentary committee has launched an investigation into whether some firms made lower bids than those who were offered contracts to build the 615,000 barrel per day refinery.

"The project has followed all legal procedures," Oil Minister Mohammad Al-Olaim told reporters, adding that contracts had been awarded not just based on lowest prices but also technical considerations.

"The project is going forward, it has not been halted. It is a very big developmental project that is very difficult to stop."

The parliamentary committee is investigating allegations that there were bids $78 million lower than those of South Korea's Daelim and Hyundai Engineering who won packages worth a total of $2.3 billion.

The budget for Al-Zour has more than doubled from initial estimates but the world's seventh-largest oil exporter has moved ahead with plans for the plant.

Kuwait plans to boost refining capacity to 1.415 million bpd from around 930,000 bpd with the new plant, and upgrade its Mina Abdullah and Mina Ahmadi refineries.

Al-Zour would start operating in 2012, two years later than initially planned.

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