Minister confident over controversial refinery

Kuwait's oil minister rejects allegations that awarding of contracts has violated laws.
Minister confident over controversial refinery
By Ulf Laessing and Rania El Gamal
Wed 17 Sep 2008 10:27 AM

Kuwait's oil minister voiced confidence on Tuesday he would win parliamentary support to build a 615,000 barrels-per-day refinery, rejecting allegations from deputies that the awarding of contracts had violated laws.

State refiner Kuwait National Petroleum Co. (KNPC) awarded contracts worth $8.4 billion, including a package worth $4 billion to build crude distillation units to Japan's JGC Corp. and South Korea's GS Engineering and Construction Corp, after a tender.

Oil Minister Mohammad Al-Olaim has come under pressure from some deputies who have alleged violations, particularly the handing out a utility and offsite services package to US engineering firm Fluor without a tender.

"There was relief among the members of the committee over data presented by the ministry," Al-Olaim told reporters after briefing the key financial committee for five hours.

"All the steps taken... were legal and transparent."

Fluor representatives in Kuwait could not immediately be reached for comment.

Al-Olaim confirmed the total value of tenders for the Al-Zour refinery stood unchanged at 4 billion dinars ($14.95 billion).

It was the second time that the minister has briefed parliament in the two-month-old row.

Al-Olaim has already won support from a state committee that scrutinises such cases, and the government has referred the project to the state audit bureau for approval before the contracts are signed.

The opposition Popular Action Bloc has said it was considering calling Al-Olaim for questioning before the whole house, a move that has in the past prompted ministers to resign to avoid a no-confidence vote.

The parliament has a history of challenging the government. The last parliament focused on questioning ministers, prompting resignations and delaying key economic legislation in the world's seventh oil exporter until a new election was held 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. (Reuters)

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