KUWAIT, (Reuters) – Kuwait’s giant new al-Zour refinery could cost as much as $19 billion, $5 billion more than the budget already approved for the plant, a Kuwait daily newspaper reported on Thursday.
Rapidly rising costs in the energy industry have hit projects worldwide and already delayed the planned start-up date for the 615,000 barrels per day Kuwait refinery start-up date by more than a year.
State-owned Kuwait Petroleum Corp (KPC) will work to raise the approved budget for the plant to $19 billion from $14 billion, said Rai, citing industry sources.
Kuwait has already doubled its budget for the plant to $14 billion from its initial cost estimate.
Kuwait and Saudi Arabia have resolved a dispute over the location for plant in the neutral zone between the two countries, al-Rai newspaper said, citing industry sources.
The Gulf Arab neighbours agreed to shift the planned location of the refinery “a few meters”, added the newspaper.
Saudi Arabian Chevron has a lease on some of the land on Kuwait’s side of the neutal zone, which Kuwait state refining arm KNPC had earmarked for the new refinery.
Chevron, operator on the Saudi side of the zone, is not using the land but may want to if it expands operations in the zone.
Chevron is in talks with Saudi Arabia about renewing its concession in the zone. The concession, which survived the nationalisation of the Saudi oil industry in the 1970s, expires in 2009.
Talks between Saudi Arabia and Kuwait have taken place at a government level for months, but a solution has yet to be announced.
KNPC officials could not immediately be reached for comment on Thursday.
Kuwait, the world’s seventh-largest oil exporter, sits on around one tenth of global oil reserves.