Kuwait MPs support giant refinery despite probe

SUSPECT DEALS: There had been questions over the tendering process for the $15 billion Al-Zour refinery. (Getty Images)

A parliamentary committee is supporting Kuwait's plans to build a new $15 billion refinery after the oil minister cooperated with a probe into contract awards for the project, the committee head said on Tuesday.

State refinery arm Kuwait National Petroleum Co (KNPC) awarded deals worth $8.4 billion in May to four South Korean and one Japanese company after a competitive tender for work on the giant 615,000 barrels per day (bpd) Al-Zour refinery. More packages were to be awarded later.

The petitions and complaints committee is investigating allegations that there were bids submitted in the tender with a lower cost to Kuwait than those awarded.

"The oil minister is cooperating, we are not against the fourth refinery, on the contrary it is a developmental and a national project," said committee head MP Mekhled Al-Azmi. He spoke after Oil Minister Mohammad Al-Olaim briefed members about the contracts.

"We already told the minister to go ahead with the other packages that have no problems," the MP told reporters.

The probe came after allegations that there were bids $78 million lower than those of South Korea's Daelim and Hyundai Engineering, which won two packages worth a total of $2.3 billion.

"God willing, our procedures are going forward and the refinery project is going ahead," said Al-Olaim after the briefing, adding he would submit a detailed report to parliament. "It was a successful meeting... the refinery is a vital project and the brothers in the committee share this view."

The parliament has a history of challenging the government, and the last assembly dedicated much time to questioning ministers, which led to several resignations until the ruler of Kuwait called fresh elections in May.

Kuwait plans to boost refining capacity to 1.415 million bpd from around 930,000 bpd with the new plant and upgrades to two other refineries.

Al-Zour is scheduled to start operating in 2012, two years later than initially planned.

The refinery will be one of the world's largest and will replace the Gulf Arab state's aging 200,000 bpd Shuaiba plant.

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