KUWAIT: KNPC plan hits costs snag

Kuwait National Petroleum Co (KNPC) said its plan to build a 615,000 barrels per day refinery by 2010 has hit a snag as international firms have proposed much higher prices than expected to carry out the work.

'KNPC has found that some of the firms bidding in the tender for the refinery it plans to build exceeded double the initial (cost) estimate it had made,' the official Kuwait News Agency (KUNA) quoted the project manager, Ahmad Al Jemaz, as saying.

'An independent foreign consultant ... has concluded that there were exaggerations by the firms,' he said.

Jemaz said state refiner KNPC and its parent firm, Kuwait Petroleum Corp, would study the available options and what would be done in the coming stage. It gave no further details. KPC is the state-owned conglomerate that oversees the Opec producer's hydrocarbons sector.

Kuna said the budget for the project, of about KD1.85 billion ($6.40 billion), was lower than KNPC's initial estimate and far less than the offers it had received.

Kuna said KNPC had received nine offers in January for the four contracts that the project involves. They came from US, French, South Korean, Japanese and UAE firms. The planned complex would produce low sulphur fuel oil 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 million bpd from 930,000 bpd.