Kharg Methanol Plant Retendered Again.

NPC has again retendered the EPC contract for the Kharg methanol project as the bidders have been asked to make revised offers. The contract was retendered in the summer after Namvaran signed the contract which did not come into effect. The project will now have a capacity of 1.5 million t/y - double the size of the original one.

Namvaran, with licencing from Davy Technology of the UK, originally bid $135m for the project. Its bid and the one submitted by PIDEC - the latter with technology from Methanol Casale of Switzerland - were in the same range. Two other bids, made by Lurgi in partnership with the local Oil Industries Engineering Company (OIEC) and Snamprogetti with the local Sazeh Consult, were close to $200m. With the expanded capacity, the project should cost more than $300m. Only the original bidders have been requested to participate in the retender.

The methanol will supplied as feedstock for a mono-ethylene glycol (MEG) plant, for which Mitsui Engineering & Shipbuilding Co. is negotiating an EPC contract after submitting the lowest price earlier this year. Other bidders on the MEG project included Tecnimont of Italy and Tecnicas Reunidas of Spain.

Kuwait Clears Funds For 4th Refinery & 2nd Petrochemical Complex: Kuwait's Supreme Petroleum Council (SPC) on Dec. 13 approved over KD 5 bn for construction of a fourth oil refinery and a second petrochemical complex. The SPC, headed by Prime Minister Shaikh Sabah Al-Ahmad Al-Sabah, approved the budget of Kuwait Petroleum Corporation (KPC) for the fiscal year 2005-06 and also approved the strategy of Kuwait Petroleum International (KPI) which operates Q8 fuel stations abroad, mainly in Europe.

The fourth oil refinery, with a capacity of 480,000 b/d, is to become a strategic source of fuel for Kuwait's rapidly expanding power generating system - which will also receive natural gas from southern Iraq (see Gas Market Trends of this week). Kuwait is striving to rebuild its oil infrastructure and has drawn up an ambitious plan to boost crude oil output to 4m b/d by 2020. KPC's Chief Executive Officer Hani Hussain told a meeting of oil experts earlier this month: "We need massive investments of $30 bn to $40 bn in the next 15 years". The plan includes the rehabilitation of oil infrastructure damaged during the Iraqi invasion of Kuwait in 1990, the buying of seven new oil tankers to modernise the fleet of the Kuwait Oil Tanker Company (KOTC) and to sell off international non-oil investments.

The SPC in its meeting on Dec. 13 approved the preliminary budget for two new northern oilfield companies to manage a $7 bn project with the co-operation of foreign majors. Kuwaiti lawmakers have expressed strong opposition to this "Project Kuwait", fearing that the country would be handing over its natural resources to foreign companies in violation of the constitution. Consequently the government drew up more acceptable technical service agreements. They ensure that the government will retain full ownership of all oil resources along with the right to determine output and prices.

The SPC has approved KPI's strategy to restructure its administration and investments by selling non-oil, non-productive assets. KPI's plan to enter into regional and international alliances has also been approved. The company has already begun to sell its fuel stations in England and Thailand.

Bahrain Is To Have $1.5 Bn Kuwaiti Integrated Petrochemical, Power & Water Complex: Kuwait Finance House (KFH) is to have a $1,500m integrated project built in Bahrain to produce petrochemicals, generate electricity and desalinate sea water. It is negotiating with international companies for partnership in its project. Related to this, KFH is to have a joint venture with Petronas of Malaysia to produce the natural gas required for the project.

The petrochemicals plant will have units to produce ethylene, ethylene dichloride (EDC), caustic soda and LPG. KFH has already secured offtake agreements with Bahrain Natural Gas Co. for the LPG output and with Mitsubishi Corp. of Japan for the output of EDC and caustic soda.

KFH's Bahrain unit has recently signed a memorandum of understanding with Petronas to seek a natural gas E&P concession in Qatar. If no such deal in Qatar is possible, then Petronas will seek a buy-back arrangement to produce the gas in South Pars, which is an Iranian extension of Qatar's offshore North Field. Petronas has been a partner of Total in Phases 2&3 of the South Pars development, and in Total's integrated project to produce South Pars gas from Phase 11 for LNG exports for which a framework agreement was signed in Tehran on Dec. 7 (see gmt24cDec13-04).

Negotiations with Qatar Petroleum (QP) are involving its chairman who is Qatar's Minister of Energy and Industry, Abdullah Bin Hamad Al-Attiyah, and Petronas' CEO Mohamed Merican. The two have become friends.

If produced and piped from Qatar's North Field or from Iran's South Pars, the gas will be used to feed the petrochemicals plant and fuel the power and water complex. In either case, however, the output from the Petronas gas E&P venture will be much bigger than the requirements of the KFH project. Petronas will have to find other takers of the remaining gas.

The Bahraini Ministry of Industry is expected by end-December to give KFH its final decision on the location of the integrated project. KFH has proposed to site the complex either at the Sitra oil refining centre or at the Hidd electric power zone.