Kuwait looks to complete Al Zour next year
Thursday, Apr 19, 2018
Kuwait is looking to complete the Al Zour oil refinery project by December 2019, according to a statement last week from Khaled Mahdi, secretary general of the supreme council for planning and development.

The deadline ties in with the state objective of achieving a production capacity of 4 million bpd of crude oil by the end of 2020, up from the current capacity of 3.2 million bpd.

Al Zour is a cornerstone of Kuwait’s development of its broader downstream capabilities, which will include more than doubling the refinery capacity of the state-owned Kuwait National Petroleum Co. (KNPC) to 2 million bpd by 2035 as part of a US$25 billion spending plan.
The expansion from around 936,000 bpd of long-held capacity across the Mina al-Ahmadi, Mina Abdullah and Shuaiba refineries will take place over two phases, according to a comment last week from KNPC CEO, Mohammad Ghazi al-Mutairi.

He said that KNPC was currently working to expand capacity to 1.4 million bpd, which includes starting up the greenfield 615,000 bpd Al Zour refinery, following the permanent closure of the 200,000 bpd Shuaiba unit in March 2017.

More specifically, the first phase of the new expansion will take domestic capacity up to 1.7 million bpd in 2025, before hitting the 2 million bpd target by 2035 under the second phase. This will include the building of a brand new refinery, although no further details have been forthcoming as yet.

“This expansion will be a solution for the treatment of heavy oil in line with the expected increase in production from the exploration and production sector,” he said. Mutairi added that it built on Kuwait’s previous 2030 goals, set in 2009, which included raising downstream capacity by 480,000 bpd to 1.4 million bpd, factoring in the completion of Al Zour.

Under the new plan, Kuwait’s domestic refining capacity will represent 42% of the country’s crude oil production capacity by 2040, up from 27%.

As it stands, Al Zour is around 57% complete, but when finished it will process Kuwait’s heavy crude from the north of the country and provide more low-sulphur fuel oil for domestic power production.

KNPC signed US$13 billion in contracts in mid-October 2016, allowing for the planned completion of Al Zour by mid-2017. However, the end of 2020 now appears a more realistic completion date, given the series of delays in awarding the final contract covering the construction of a pipeline to supply crude oil, Richard Mallinson, senior geopolitical analysts for Energy Aspects, told NewsBase Intelligence (NBI).

Along with other related projects, Al Zour will produce clean fuel, in addition to kerosene and diesel, for the local power market, processing around 615,000 bpd of crude oil.

In tandem with this, Kuwait Oil Co. (KOC) announced last week that it had completed two production centres (numbers 29 and 30) with a capacity of 100,000 bpd each. This, and the completion of the third centre (number 31), is part of the plan to increase the company’s crude oil output in North Kuwait to 1 million bpd, from the current 700,000 bpd.

“Increasing its oil output is not really the end game in and of itself for Kuwait; it’s much more interested in adding value to these raw flows by using them to make much higher-priced petrochemicals products for export,” added Mallinson.

Alongside Al Zour, Kuwait plans to build a new integrated petrochemical facility, the ‘Olefins-3 project’, which will entirely use liquid feedstock from the refinery.

KNPC parent, Kuwait Petroleum Corp. (KPC), is still in talks with a number of IOCs – including Royal Dutch Shell, BP and Total – for the technical consultancy work for a steam cracker, according to various company sources. This will have an ethylene capacity of 1.4 million tpy, a 450,000 tpy propylene plant, a 940,000 tpy polyethylene plant and a 550,000 tpy polypropylene plant.

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