Kuwait lets contract for grassroots Al-Zour refinery

Kuwait National Petroleum Co. (KNPC) has let a fifth contract package to a joint venture of Italy’s Saipem SPA and India’s Essar Projects Ltd. for work related to construction of the proposed 615,000-b/d Al-Zour refinery complex in southern Kuwait, which is to be built as part of the company’s Clean Fuels Project (OGJ Online, July 1, 2011).

As part of Package 4, the joint venture will provide engineering, procurement, and construction (EPC) for tankage, associated road works, buildings, pipe racks, pipelines, water systems, and control systems for the new refinery, Saipem said.

The scope of the contract also includes delivery of precommissioning services as well as assistance during commissioning, start-up, and performance testing phases for infrastructure and systems included in the package.

Package 4 is scheduled to be completed by early 2019, the service provider said.

This latest contract follows KNPC’s official award last month of four contract packages worth an estimated $11.5 billion for the grassroots refinery (OGJ Online, July 31, 2015). At the time, the state-run company said it would award a fifth and final package in the coming weeks.

KNPC previously awarded Al-Zour’s Package 5 for EPC services on an associated offshore marine export terminal at the refinery to a consortium of Saipem, South Korea’s Hyundai Engineering Co. Ltd., and SK Engineering & Construction.

As part of Package 5, which is valued at $1.5 billion, Saipem said the consortium additionally will provide precommissioning services as well as assistance during commissioning, start-up, and performance testing phases for a solids pier, sulfur pelletizing-conveying, subsea outfall lines, a construction dock, an offshore sea island, and a small boat harbor.

Package 5 is due to be completed by second-half 2019, Saipem said.

While it did not disclose a specific value for Package 4, Saipem did value its combined share from both packages at $1.3 billion.

Al-Zour Packages 1-3

KNPC awarded Package 1 for the grassroots refinery—which covers engineering, procurement, construction, and commissioning for main processing units at the plant—to a consortium of Spain’s Tecnicas Reunidas SA, China’s Sinopec Engineering (Group) Co. Ltd., and Hanwha Engineering & Construction Corp. of South Korea.

The consortium’s scope of work under the $4.1 billion lump-sum turnkey contract, which is to last 45 months, includes delivery of the following:

• Three 210,000-b/d crude distillation units.

• Three 110,000-b/d atmospheric residue desulfurization units.

• Three 62,000-b/d diesel hydrotreating units.

• Two 18,200-b/d naphtha hyrdrotreating units.

• Two 53,000-b/d kerosene hydrotreating units.

• An 8,500-b/d saturated gas unit.

• A heavy oil cooling unit.

KNPC let Packages 2 and 3, worth a combined value of about $5.75 billion, to a joint venture of Fluor Corp., Daewoo Engineering & Construction Co., and Hyundai Heavy Industries Co. for delivery of EPC on other associated units and infrastructure necessary for the project.

The Al-Zour refinery, which will become the largest in the Middle East upon completion, has a current overall investment cost of about $13 billion.

In addition to serving both Kuwaiti and global demand for ultralow-sulfur petroleum products, the greenfield refinery will allocate part of its production to help satisfy demand for low-sulfur fuel oil by Kuwait’s Ministry of Electricity and Water, according to Saipem.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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