October 12, 2008

Kuwait strikes key refinery deal with Saudi Arabia

Kuwaiti newspaper Al Rai reported that Saudi Arabia and Kuwait have struck a deal over the site of a planned oil refinery near their common border. The deal was reached during talks in Riyadh a few days ago.

As per report, Saudi Texaco, which manages oil on behalf of Saudi Arabia in the divided zone shared with Kuwait, was reported to have objected to the location of Kuwait's new refinery in an area known Al Zour, which is close to the border.

Kuwait has raised the estimated cost of the 615,000 barrels per day refinery to USD 19 billion from USD 15 billion, due to an increase in global prices.

When Kuwait began planning for the project several years ago, it had earmarked only USD 6.3 billion. However, bids by international companies came at more than USD 15 billion, prompting Kuwait to cancel the tender and invite new bids on the basis of cost plus profit margin.