Japan's JGC says not told its Kuwait refinery EPC deal scrapped

Platts ^ | 16 Mar 2009 | Takeo Kumagai

[thackney]

Japan's JGC has not officially been informed about the cancellation of Kuwait's 615,000 b/d al-Zour refinery project, in which the engineering and construction company had secured key contracts, a JGC official said Monday.

"We are aware of the declared cancellation of the project by prime minister Sheikh Nasser al-Mohammed through media reports," the official said. "However, we have not been informed about this from Kuwait as yet. We are in the middle of confirming this information through our networks," he added.

JGC shares were trading at Yen 1,129 ($11.53) each at 10:22 am local time Monday (0122 GMT) on the Tokyo Stock Exchange, down 6.77% from Friday.

Kuwaiti newspaper al-Watan Sunday quoted the country's premier as saying the government would formally scrap the 615,000 b/d al-Zour refinery project Monday after the state audit bureau declared that the project should not go ahead.

Sheikh Nasser told al-Watan that the final decision to cancel the long-delayed refinery project would be taken at Monday's regular cabinet meeting.

"The government is committed to the decision by the central audit committee on the country's fourth refinery and we will stop the project formally at the next cabinet meeting," Sheikh Nasser said.

The cost of the refinery, which would have been the largest in the Middle East, was originally estimated at $14.5 billion.

The project was submitted for review by the audit bureau in August after some members of parliament questioned the legality of engineering contracts awarded by state-owned Kuwait National Petroleum Co.

In May 2008, Japan's JGC won an engineering, procurement and construction contract with South Korea's GS Engineering & Construction to build the main manufacturing units at the refinery on the al-Zour coast, 85 km south of Kuwait city.