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

The private Kuwait Finance House (KFH) has been 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 has also been seeking a concession to develop and produce natural gas in Qatar's offshore North Field and have a marine gas pipeline built to Bahrain.

Preparations were reported in 2005 for the integrated petrochemicals, power and water complex planned for Sitra by KFH which was heading a private consortium. KFH and its partners were then considering a plant of similar configuration in the Divided Zone (DZ).

The invited contractors for the Bahrain project were 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 were to be evaluated by Jacobs Engineering of the US, with awards then planned for the fourth quarter of 2005. But since then, there has been no report on progress for any of these projects, apparently due to a big rise in costs and lack of available contractors. The planned complex was to have the capacity to produce 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 were then said to be in place with Mitsubishi Corp. of Japan and Bahrain Natural Gas Co. (Banagas). KFH planned to begin raising equity in the fourth quarter of 2005. Norton Rose was acting as legal adviser.

KFH had received approval from the Bahraini Ministry of Industry on its favoured site for the project at Sitra. The decision then required final approval from the cabinet of the island state. Posford Haskoning of the UK had been appointed to conduct an environmental impact assessment. KFH was then watching the progress of negotiations for Bahrain to receive natural gas from Qatar after the two governments reached a supply agreement in early May 2005.

Alongside negotiations between Manama and Doha, KFH was then part of a private consortium already embarked on talks with the state-owned 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, 2005, KFH and the Bahraini government had "an informal understanding that if the state-level negotiations are successful, the petrochemicals project will receive a portion of the gas".

A proposal was understood to have been prepared by KFH and its partners for submission to the 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.