KUWAIT CITY (Thomson Financial) - Four South Korean and a Japanese firm were on Sunday declared winners of four major contracts worth billions of dollars to build a new refinery in Kuwait, an oil official said.
The total value of the bids made by the companies was around $8.3 billion, Mohammad al-Ajmi, spokesman for national refiner Kuwait National Petroleum Company (KNPC), told AFP.
One contract for the main manufacturing units was awarded to a consortium of Japanese JGC Corp and South Korea's GS Engineering and Construction Corp for $4 billion, he said.
SK Engineering and Construction Co of Korea was awarded the subsidiary units for 2.06 billion dollars, while Daelem Industries, another South Korean firm, won a contract of tanks for $1.184 billion.
Korea's Hyundai Engineering and Construction Co was awarded a contract for offshore facilities at $1.12 billion, Ajmi said.
A separate contract for consultancy, which was not part of the tender, had been earlier awarded to US Fluor Engineering firm and it was reported to be for $2 billion.
Kuwait has earmarked 4 billion dinars to build the 615,000 barrels per day (bpd) refinery to be constructed in the southern Al-Zour area, close to the border with Saudi Arabia.
The first round of bids was scrapped in September because bids came in at more than $15 billion, way above the initial budget of $6.3 billion.
State-owned KNPC subsequently earmarked 15 billion dollars for the project.
The new contracts will be based on a cost plus profit margin, which means Kuwait paying the cost of the project plus an agreed profit which has not been disclosed, making the total cost higher than the 8.3 billion dollars announced.
Construction is due to start later this year or early in 2009, with the refinery to come on stream in May 2012, Ajmi said. Completion was originally planned for 2010.
KNPC is also planning a multi-billion-dollar project to modernise two of its three refineries at Al-Ahmadi and Mina Abdullah, which currently have a combined capacity of just over 700,000 bpd. The third refinery will eventually be retired.
The new refinery and the upgrade project are slated to boost Kuwait's refining capacity from the current 936,000 bpd to 1.4 million bpd by 2012.
Kuwait, which sits on about 10 percent of global crude reserves, currently produces around 2.55 million bpd. tf.TFN-Europe_newsdesk@thomsonreuters.com wj COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.