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Kuwait 2017 | INDUSTRY | FOCUS: CLEAN FUELS PROJECT

Kuwait is embarking on a project to revolutionize its hydrocarbon industry, once again. New projects are garnering a massive amount of investment and ensure the country will remain competitive in the industry.

In April of 2014, Kuwait began the third stage of developing its hydrocarbon industry, following its establishment in the 1960s, and subsequent modernization in the 1980s. This time, the Kuwait National Petroleum Company (KNPC) initiated the Clean Fuels Project (CFP) to place Kuwait amongst the top producers in the downstream industry.

The project aims to expand and redevelop the Mina Al-Ahmadi (MAA) and Mina Abdullah (MAB) refineries, with 346,000 and 454,000bpd, respectively, bringing total capacity to 800,000bpd. The two refineries will also be linked to create an integrated refining complex, with increased flexibility to cater to growing and changing local and international demand. Lastly, the project envisions enhancing the performance of both refineries by optimizing energy usage and implementing better safety and operational regimes. As part of the project, KNPC plans to permanently close the Al-Shuaiba refinery and channel its outpost into the expanded refineries, as well as into the new greenfield refinery complex, Al-Zour, which will open in 2018.

The primary innovation is the conversion of high sulfur oil with low value into higher-value products with sulfur levels of no more than 5%. To achieve this, new technologies include a gas oil desulphurization station, a vacuum distillation unit, and a delayed coking unit, as well as a sulfur-recovery system. Furthermore, the two refineries will be upgraded to produce diesel and kerosene for export.

In line with commitments made by HH Al-Amir during the Paris Agreement on Climate Change, Kuwait is taking steps toward the production of fuel with cleaner output in integrated and more energy-efficient production facilities.

In April 2016, KNPC concluded a domestic loan of USD3.9 billion for investments in the CFP project, put together by NBK and Kuwait Finance House and supported by a group 11 banks. For further financing, KNPC anticipates to attract another USD4 billion loan for further investments, this time with foreign lenders. According to KNPC's CEO, Mohammad Ghazi Al-Mutairi, the loan will be backed by South Korean, Dutch, British, and Italian export credit agencies.

Due to available resources, manpower, and the overall scope and impact of the project, the contracts were divided into three packages: one for MAA and two for MAB. The EPC package, the first for MAA, was inked by a consortium of the Korean GS E&C, SK E&C, and the Japanese JGC Corporation and has a total value of KWD1.36 billion. The second package has a contract value of KWD1.1 billion and is led by Petrofac and supported by Samsung Engineering and CB&I Nederland.

The third package, for the redevelopment of the Mina Abdullah refinery, went to a consortium led by Fluor, in cooperation with Daewoo Engineering & Construction and Hyundai Heavy Industries, for KWD962 million. Fluor was also responsible for the front end engineering design (FEED) of this project, with preliminary design support of the Engineering Consultants Group (ECG). Preliminary works on the project site were awarded to Samsung and Siemens, with the latter also responsible for high-voltage substations for both refineries. Essential licensing for the desulphurization technology came from Chevron Lummus Global. Contracted for the project management services is Foster Wheeler, supported by a JV of Hill International and System Development and Project Management for on-site consulting services.

The total book value of the project is a project is KWD4.68 billion and is scheduled to be completed in mid-2018.