Kuwait's top energy council has approved plans to build a 615,000 barrels per day refinery, the Middle East's biggest, after months of delays due to spiralling construction costs.
Kuna said the Supreme Petroleum Council had approved government plans to set up the country's fourth refinery.
In July, state oil refiner Kuwait National Petroleum Company (KNPC) had increased the budget for the Al Zour refinery to about $14 billion, more than twice the original cost estimate.
Rapidly rising costs in the energy industry have hit budgets and delayed refinery projects in the Middle East.
The GCC state cancelled a first tender for the refinery in February, after bids came in far above its initial budget. Local media said some bids had reached as much as $15 billion.
A new tender was launched and KNPC said in July around 30 companies had made preliminary bids. According to media reports, French firm Technip, US companies KBR, Bechtel and Foster Wheeler and Italy's Snamprogetti submitted pre-qualification bids.
KNPC plans to complete construction of the refinery by the end of 2011, a year later than the original schedule.
At 615,000 bpd, Al Zour would exceed the capacity of the Middle East's largest refinery, Saudi Arabia's 550,000 bpd Ras Tanura plant. Saudi Arabia plans to build another 400,000 bpd refinery in Ras Tanura.
Kuwait has yet to appoint a new oil minister after Sheikh Ali Al Jarrah Al Sabah resigned in June to avert a no-confidence vote against him in parliament.
Water and Electricity Minister Mohammad Al Olaim has been acting oil minister since Sheikh Ali's resignation. Kuwait sits on around 10 per cent of the world's oil reserves. It produced 2.41 million barrels per day of crude in August, according to a survey.
