Kuwait closes Shuaiba Refinery, plans deal with Oman’s Duqm
Thursday, Apr 06, 2017
State-owned Kuwait National Petroleum Co. (KNPC) has closed the ageing 200,000 bpd Shuaiba refinery because of declining processing runs and the plant’s inability to produce higher-standard products.
The Shuaiba plant was opened in 1968 and its closure was planned as part of Kuwait’s Clean Fuels Project, whose completion is targeted for 2020.
Kuwait’s two other refineries, the 466,000 bpd Mina Abdullah and 270,000 bpd Mina al-Ahmadi plants, are undergoing refurbishment and expansion that is due to be finished by the end of 2018.
A new 615,000 bpd refinery and petrochemical complex is under construction at Al Zour and when complete, probably by 2020, the country’s refinery capacity will rise to 1.42 million bpd.
In the meantime, Kuwait will need to import fuel oil for at least a year to supply its power generation facilities. It will also need to import gasoline until the Al Zour facility comes into operation.
KNPC is now looking to convert the Shuaiba facility into a storage terminal. There are 72 storage tanks with a capacity to hold 11.8 million barrels of crude oil and products at the site, which includes a three-berth pier.
Other Gulf producers – Saudi Arabia, the UAE and Iran – have built new refineries and are involved with upgrading their existing plants in order to address rising fuel standards in foreign markets.
Kuwait’s US$12 billion Clean Fuels Project has been subject to political differences within the country’s parliament and has caused delays in the past, mostly disputes over contracts.
Kuwaiti product exports during 2016 averaged 757,000 bpd and consisted of LPG, diesel, naphtha, jet fuel and gasoline.
Meanwhile, state-owned Kuwait Petroleum is scheduled in April to sign a partnership agreement with the Oman Oil Co. (OOC) regarding the development of Oman’s Duqm Refinery and Petrochemical Industries, located on the sultanate’s Indian Ocean coast.
The project was meant to be a partnership between OOC and Abu Dhabi’s International Petroleum Investment Co. (IPIC), but IPIC pulled out of the project last year.
The Duqm project will include a 230,000 bpd refinery that will be a 50:50 joint venture. The partners will finance the project with 60% shared equity and 40% through project finance from international banks and export credit agencies.
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