Kuwait cancels second refinery project
21 Mar 2009
Kuwait National Petroleum Co. has asked Fluor Corp to stop working on a huge refinery project, the US engineering and construction company said Friday. It said the remaining $2. billion in work would be removed from first-quarter backlog.
Kuwait National Petroleum (KNP), a unit of state-owned Kuwait Petroleum Corp, told Fluor to stop work on the utilities and offsites for the now-canceled al-Zour refinery. Fluor had been serving as the overall project manager, spokesman Keith Stephens said. The 300 workers engaged in engineering work on the project will be reassigned, he said.
KNP's termination of the project is the second cancellation of a major oil project since December amid allegations of corruption. In December, Kuwait backed out of a $17.4 billion joint venture petrochemical project with Midland, Michigan-based Dow Chemical Co. (See: Kuwait scraps $17-billion Dow deal)
Originally, KNP had planned to spend about $14 billion on the 615,000 barrel-per-day al-Zour refinery. It would have been the nation's fourth refinery, with commissioning planned for 2012. It was reported this week that Kuwait planned to scrap the project, citing the emirate's Prime Minister Sheikh Nasser al- Mohammed al-Sabah.
The country notified South Korean builders of the cancellation yesterday, saying the refinery is no longer economically viable as oil prices have fallen more than 50 per cent from their peaks.
Fluor said last month that 2008 year-end backlog was $33.2 billion, a 10 per cent increase from 2007. Fluor, the largest publicly traded US engineering firm, fell $1.37, or 3.5 per cent, to $37.44 at 9:34 a.m. in New York Stock Exchange trading. The shares have dropped 41 per cent in the past 12 months.
