Kuwait will issue a new tender for its planned $6 billion, 615,000 barrels per day al-Zour oil refinery after it deemed the first round of bids by international companies too costly, a top official said on Wednesday.
Spiralling costs are hitting energy projects throughout the region as the oil and gas industry strains to bring new capacity online. On Tuesday, Qatar Petroleum and Exxon Mobil Corp blamed cost inflation as they dropped plans to build a multi-billion dollar plant that converts gas to fuels.
In February, Kuwait's official news agency quoted a KNPC official stating that some of the bids in the previous tender were more than double its cost estimates.
"We will reissue the tender," Kuwait National Petroleum Company Chairman Sami al-Rushaid told Reuters on the sidelines of an official function. When asked if the tender would be reissued due to higher-than-expected bids, he said "yes".
KNPC plans to issue the tender as soon as it gets approval from its parent company Kuwait Petroleum Corp., he said.
Prior to the decision to reissue, KNPC had postponed the tender's award from December to March due to delayed bidding for the project by international firms. KNPC said last year it wanted work on the refinery to begin in mid-2007 and completion in 2010.
The planned complex would produce environmentally-friendly fuel for the state's electricity plants.
The new refinery coupled with planned upgrade works on two of three existing refiners, would boost Kuwait's overall refining capacity to 1.5 billion bpd from 930,000 bpd.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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