Kuwait scraps oil refinery project

A $15bn project to build a new oil refinery is to be cancelled after an independent watchdog says the project is not feasible.

Kuwait's government has cancelled a long-stalled US$14.5 billion (Dh53.25bn) refinery project, marking a new setback in the country's efforts to ­develop its energy sector. Sheikh Nasser al Ahmad Al Sabah, the Kuwaiti prime minister, said the cabinet would stop the deal at its weekly meeting today, the daily Al Watan reported. "We are committed to the government accounting office report on the fourth refinery and will stop it formally at the next meeting of the council of ministers," Sheikh Nasser was quoted as saying. The cancellation was widely expected, and follows the high-profile scrapping of a $7.5bn joint-venture agreement with Dow Chemical in December. The Al Zour refinery, which would have processed 615,000 barrels of oil per day, has faced repeated delays and investigations by parliament and the accounting office after construction contracts were awarded to four Asian firms last May. Critics said the contracts were not awarded competitively and should have been approved by the nation's tenders committee, an anti-corruption body. The fight over the refinery fed into a larger dispute between the government and opposition over energy contracts and the legislature's right to question the prime minister. The dispute led to the resignation of the cabinet and the appointment of a new oil minister. Kuwait has struggled for years to complete energy deals. The collapse of the Dow deal in December was widely seen as a serious blow to the country's standing among international oil firms and other investors. An $8.5bn proposal to develop the country's northern onshore fields in partnership with foreign firms, dubbed Project Kuwait, has been delayed since the 1990s because politicians want greater concessions from foreign partners. [e-mail]