Kuwait cancels US$ 15 billion refinery project

20 March 2009

The Kuwaiti government has cancelled construction of the US$ 15 billion al-Zour oil refinery. The 2012 facility was previously planned for completion in 2012, with a projected capacity to refine 615000 barrels of crude oil per day.

Among the contractors losing out due to the decision is Fluor of the US, which announced it will strike US$ 2.1 billion from its order backlog in the first quarter of the year as a result of the decision. A US$ 4 billion contract awarded to Japan's JGC and Korea's GS Engineering & Construction has also been cancelled, as has a US$ 1.2 billion contract for Korea's Daelim and a US$ 1.1 billion marine package for Hyundai Engineering & Construction.

The decision to scrap the project was taken by the state-owned Kuwait National Petroleum Company (KNPC). The project has had a short and troubled history, with contract awards coming under scrutiny from Kuwait's State Audit Bureau, following allegations of irregular tendering procedures from opposition members of parliament..

These investigations seem to have added to the pressure on prime minister Sheikh Nasser Al Mohammed Al Sabah's government., which was dissolved earlier this week in an attempt to break the political deadlock.


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