KUWAIT CITY, 9 May 2007 — Kuwait has doubled the cost estimates for a new refinery to about $12 billion after a first round of bidding was canceled because of high offers, the emirate’s oil minister said yesterday. “We have to be realistic. This is the market and we have to cope with what’s going on in the market,” Ali Jarrah Al-Sabah told reporters in response to a question about the doubling of the refinery cost. He said the decision to double the cost estimates from the original $6.3 billion was taken by national oil conglomerate Kuwait Petroleum Corp. (KPC) on Monday. Kuwait oil officials have said that offers by international companies for the 615,000 barrels per day (bpd) refinery came in at around $15 billion, forcing the authorities to scrap the tender.
The chairman of Kuwait National Petroleum Co. (KNPC), Sami Al-Rasheed, said the new decision still has to be approved by the Supreme Petroleum Council (SPC), the country’s highest oil authority.
The new bidding will be based on a cost plus profit margin, which means paying the cost to the foreign companies plus an agreed profit, Rasheed said. “We expect the SPC to study the decision later this month... If everything goes well we expect to invite bids in July,” he added. The new refinery was originally due for completion by 2010, but Rasheed said that now “there is a delay and the new target date is end of 2011.”