Package is the last to be awarded as part of the $17bn New Refinery Project
Saipem has won the final engineering, procurement, and construction (EPC) contract for Kuwait’s $17bn New Refinery Project.
The documents were signed at a ceremony on 15 August, according to a source close to the scheme.
The Italian contractor bid $842m for the contract.
The scope of the package includes the construction of a series of feed pipelines with a total length of 350 kilometres.
The pipelines will supply 615,000 barrels a day (b/d) of crude and 300 million cubic feet a day of gas feedstock for the Al-Zour refinery.
It was reported in June that Italy’s Saipem was the frontrunner for the final package, after submitting the lowest bid.
While the main contracts for the greenfield refinery, which is being built in Al-Zour, were awarded in 2015 and work has been ongoing, the final package, first tendered in 2014, was delayed because of allegations of corruption among contractors.
In January, the UAE’s Dodsal Group, which had submitted a bid of $868m, was chosen by Kuwait’s Central Tenders Committee as the frontrunner for the project.
The choice proved contentious as the contractor had been accused of delaying previous work undertaken in the country. Kuwait Oil Company (KOC) advised Kuwait’s Supreme Council of Energy to retender the project and the client invited fresh bids in March this year. Three contractors submitted bids for the deal in June.
The feed pipelines will provide crude feedstock and fuel gas from KOC’s South Tank Farm facilities in Al-Ahmadi to the New Refinery.
Other bidders on the feed pipeline package were:
SK Engineering (South Korea) – $846.7m
Consolidated Contractors Company (Lebanon) / Tecnicas Reunidas (Spain) – $855m
The newly-formed Kuwait Integrated Petroleum Industries Company is developing the New Refinery Project, located north of the Al-Zour power station, to meet growing demand from the power sector. It is set to produce low sulphur fuel oil by processing heavy crude.
Along with the Clean Fuels Project, which will upgrade Kuwait’s oldest refineries Mina al-Ahmadi and Mina Abdullah, the New Refinery Project will boost the Opec producer’s refining capacity from 930,000 b/d to 1.4 million b/d by 2020.