KNPC signed contracts worth $13.2 billion with international firms to build a new refinery.

The Kuwait National Petroleum Company yesterday signed contracts worth $13.2 billion with international firms to build a refinery said to be the state’s largest development project. The deal comes as Kuwait, a key oil producer, moves to modernize its energy facilities and boost its refining capabilities. The Al-Zour refinery near the border with Saudi Arabia is slated to produce 615,000 barrels per day and come on stream in Nov 2019, KNPC CEO Mohammad Al-Mutairi told reporters.

The 10 foreign companies involved include Spain’s Tecnicas Reunidas, China’s Sinopec, South Korea’s Hyundai, SK, Daewoo and Hanwha, Britain-based Fluor, Italy’s Saipem and India’s Essar. The new refinery will eventually be part of a complex to include a huge petrochemicals venture and a liquefied natural gas (LNG) import facility, both under study, Mutairi said.

The new refinery has a strategic goal of supplying low sulfur fuel (less than one percent compared to the current four percent) to local power plants, which will significantly reduce polluting emissions. The refinery will provide clean fuel to ministry of electricity and water stations, and new products in line with requirements of the European markets, which will help KNPC to open up fresh markets on the continent, in addition to promoting the oil industry at home, Mutairi added.

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Last year, the KNPC signed contracts for a $12 billion project to upgrade two of its three existing refineries. Kuwait sits on 101.5 billion barrels of crude reserves – equivalent to 6.8 percent of the world’s proven reserves according to the latest OPEC figures. It pumps 2.8 million bpd.

Meanwhile, Oil Minister Ali Al-Omair said a technical meeting of oil experts from OPEC and non-OPEC countries later this month will discuss a proposal by Venezuela to introduce a price band for oil. “There is no decision. It will be discussed, and (based on) the outcome, we will decide whether to agree or disagree,” Omair told reporters.

He did not elaborate. In an interview with Reuters on Monday, Venezuela’s former oil minister Rafael Ramirez said the proposal – to be presented to the meeting on Oct 21 – would reapply a mechanism of progressive production cuts to control prices, with a “first floor” of $70 per barrel and a later target of $100 per barrel.

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