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Kuwait MPs threaten to block refinery deals

Kuwait, August 12, 2008

Contracts awarded for the $15 billion Al-Zour refinery may be at risk after a group of Kuwaiti politicians warned the government not to sign them, saying the tender process had violated the law.

Deputies from the Popular Action bloc said that, among other issues, the government should not have awarded US firm and project manager Fluor Corp a separate contract for utility and offsite services without a tender.

A parliamentary committee has been probing some contracts awarded for the building of the 615,000 barrels per day refinery on the grounds that there were unsuccessful bids submitted at a lower cost.

State refiner Kuwait National Petroleum Company awarded the contracts after a competitive tender for work.

The deals include a package worth $4 billion to build crude distillation units for Japan's JGC Corp and South Korea's GS Engineering and Construction Corp.

A $2 billion contract was awarded to South Korea's SK Energy to build a hydrogen production unit, while Daelim Industrial, also from South Korea, won a $1.2 billion contract to set up storage tanks.

Last month, the committee signalled support for the government to go ahead with the project after Oil Minister Mohammad al-Olaim cooperated in the probe.

But the four-strong group from the Popular Action bloc has now called on Olaim not to sign any final contracts, or face a questioning in parliament.

"This large and vital project, which is supposed to boost refining capacity and comply with environmental standards, has been subject to interference and contradictory decisions," the bloc said in a statement late on Monday.

The Kuwaiti parliament has a history of challenging the government and a questioning such as that considered by the bloc has often led in the past to a no confidence vote and the resignation of the minister in question.

The last parliament focused on questioning ministers, prompting several resignations and delaying key economic legislation until a new election was called on May 17.-Reuters




Tags: deal | Al-Zour Refinery | threaten | Kuwait MPs |

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