KUWAIT - Kuwait Finance House For Integrated Petrochemical/IPWP Ventures In Bahrain & DZ.

The private Kuwait Finance House (KFH) is promoting integrated ventures at Sitra in Bahrain and in the Divided Zone (which is shared equally by Kuwait and Saudi Arabia) to produce petrochemicals as well as power and water. It is also seeking a concession to develop and produce natural gas in Qatar's offshore North Field and have a marine gas pipeline built to Bahrain.

Responses to a request for quotations (RFQs) are due by end-June for the combined FEED and EPC contracts on the integrated petrochemicals, power and water complex planned for Sitra by KFH which is heading a private consortium. KFH and its partners are considering a plant of similar configuration in the Divided Zone.

The invited contractors for the Bahrain project are the Shaw International of the US for the ethane cracker, Uhde of Germany for the ethylene dichloride (EDC) and caustic soda units, Chicago Bridge & Iron of the US for the gas separation unit, General Electric (GE) of the US for the power island and Weir International of the UK for the water desalination plant.

The bids will be evaluated by Jacobs Engineering of the US, with awards due early in the fourth quarter. The planned complex will have the capacity of 315,000 t/y of EDC, 167,000 t/y of caustic soda, 1,000 MW of power and 30m gallons/day of water.

Offtake agreements for EDC and caustic soda are in place with Mitsubishi Corp. of Japan and Bahrain Natural Gas Co. (Banagas). KFH plans to begin raising equity in the fourth quarter. Norton Rose is acting as legal adviser.

KFH has received approval from the Bahraini Ministry of Industry on its favoured site for the project at Sitra. The decision now requires final approval from the cabinet of the island state. Posford Haskoning of the UK has been appointed to conduct an environmental impact assessment. KFH is watching the progress of negotiations for Bahrain to receive natural gas from Qatar after the two governments reached a supply agreement in early May (see Gas Market Trends of this week).

Alongside negotiations between Manama and Doha, KFH is part of a private consortium already in talks with Qatar Petroleum (QP) for a gas E&P deal and planning a pipeline between Qatar and Bahrain, which would both supply the KFH project and contribute to Bahrain's other requirements such as power plants and industries. According to MEED of May 13, KFH and the Bahraini government have "an informal understanding that if the state-level negotiations are successful, the petrochemicals project will receive a portion of the gas".

A proposal is understood to have been prepared by KFH and partners for submission to Khafji Joint Operations, the 50:50 joint venture between Kuwait Gulf Oil Co. and Saudi Arabia's Aramco Gulf Operations, about building a close replica of its Bahrain project in the Divided Zone, following completion of a flared gas utilisation study.