Global Processing

Kuwait to scrap $14 billion refinery project

March 16, 2009
Kuwait is scrapping a $14 billion project to build a fourth refinery in the oil-rich country, the prime minister said in remarks published by the Associated Press. The announcement was the second cancellation of a major oil project since December amid government corruption allegations. Lawmakers have accused state officials of profiteering from the project because the contracts to build it did not go through the Central Bidding Committee. The Cabinet denies the accusations. The scrapping of the 615,000 barrels a day refinery, which included participation by Japan''s JGC and South Korea''s GS Engineering and Construction Corp., comes just months after Kuwait backed out of a $17.4 billion joint venture with U.S. giant Dow Chemical Co. in late December, just days before the petrochemical project was to be launched. The move was a major blow for Dow. Parliamentary pressure was the catalyst behind the decision to scrap the Dow deal. In the months since that deal, the government has also been under renewed pressure to enact a stimulus package to help the country deal with the global financial meltdown. That bill is still with a parliamentary committee for review. The focus of the tensions between the oil-rich country''s executive and legislative authorities is tied to lawmakers accusing the prime minister of wrongdoing and inadequacy. Lawmakers have barraged Sheik Nasser with attempts to question him in parliament over possible misuse of funds, failing to run the country and demolishing a mosque. The ruler, Sheik Sabah Al Ahmed Al Sabah, might dissolve parliament to pre-empt the hearings, which are seen as an embarrassment to the ruling family and could lead to a decision by parliament to declare its intent not to cooperate with Sheik Nasser''s Cabinet. In November, the Cabinet resigned to stop an attempt by three lawmakers to question Sheik Nasser about corruption and deteriorating public services despite the country''s oil wealth. Many lawmakers said the accusations were unfair, and the emir reappointed him as prime minister. Sheik Nasser formed a new Cabinet in January with few new faces. The scrapped refinery was to come on line 2012.