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Success of BRI-Backed Oil Refineries Fuels China-Kuwait Co-operation

With three mainland-backed oil and gas projects nearing completion, China and Kuwait look to future ventures.

Photo: A model for China-Kuwait co-operation: The massive Kuwait New Refinery Project.
A model for China-Kuwait co-operation: The massive Kuwait New Refinery Project.
Photo: A model for China-Kuwait co-operation: The massive Kuwait New Refinery Project.
A model for China-Kuwait co-operation: The massive Kuwait New Refinery Project.

Last month, saw China and Kuwait deliver on three significant milestones with regard to their joint oil and gas refining development programme, a project undertaken within the wider framework of the Belt and Road Initiative (BRI). These three key developments saw the first phase of one project come online, the completion of work on an essential section of another and the official handing over of vital equipment for a third.

The last of these saw China Petrochemical Corporation (Sinopec) transfer ownership of the sixth and final set of oil-refining equipment for the Kuwait New Refinery Project (NRP) – one of the largest refinery projects in the Middle East – at a handover ceremony in Kuwait on 22 October. Speaking during the ceremony, Cheng Yongru, an Economic and Commercial Counsellor at the Chinese Embassy in Kuwait, said the project had proven to be a model for co-operation between China's BRI and Kuwait Vision 2035, the western Asian nation’s own long-term development plan.

The successful handover of the installed equipment sees the Sinopec Fifth Construction Company – the Sinopec subsidiary that acted as one of the lead sub-contractors for the project – complete the final requirement specified in its US$518 million contract. Over the past three years, according to Wang Zhiwei, the company’s Project Manager, it has installed 22,400 tons of steel structures, welded 2.4 million inch pipes, installed 1,026 units of equipment and laid 3,700km of cable. With the majority of the work now complete, the new refinery is scheduled to come online next year. Once fully operational, it will increase Kuwait’s oil-processing capacity by 31.5 million tons of crude per year.

A few days after the handover, it was announced that another joint-venture refinery – developed on a partnership basis between Sinopec and the state-owned Kuwait Petroleum Corp (KPC) – was ready to launch its primary gas transmission line. The essential difference this time was that this second project was based well within Chinese territory – on the island of Donghai, just off the coast of Guangdong. With first phase investment of about $5 billion and total costs expected to run to some $9.5 billion, it is believed the refinery will become operational late next year. Once up and running, it will have a refined crude oil production capacity of 15 million tons a year, as well as an ethylene complex with an output capacity in excess of nine million tons per year.

Earlier in the month, meanwhile, COOEC-Fluor Heavy Industries (COOEC-Fluor) – a Chinese-US partnership between Beijing-based China Offshore Oil Engineering Co and Fluor, a Texas-headquartered engineering and construction giant – announced it had completed the pipe spool fabrication section of its work for the Al-Zour Refinery Project. This massive $19 billion facility, situated about 90km south of Kuwait City, is being developed by Kuwait Integrated Petroleum Industries Company, Fluor and two South Korean civil engineering heavyweights – Daewoo Construction and Engineering and Hyundai Heavy Industries.

The module fabrication, however, took place at the COOEC-Fluor fabrication yard in Zhuhai. Under the terms of the contract, COOEC-Fluor needed to deliver more than 95,000 pipe spools by fabricating 337,000 linear metres of carbon, alloy and stainless-steel pipe in record time. The company also fabricated and assembled 188 modules with final load-out and shipping to the project completed late last month.

Commenting on its contribution to the project, Chris Vertanness, Vice-president and Director of Operations at the company’s fabrication yard, said: "The completion of the pipe spool fabrication package is a significant achievement for COOEC-Fluor. Not only does it showcase the yard’s extensive pipe and steel fabrication capability, but it also demonstrates our expertise in modular assembly as well as our ability to reliably deliver large-scale projects at an accelerated pace – even if that involves shipping more than 15,500 spools per month at peak."

The rapid roll-out of these refinery projects has been seen as a clear sign that Kuwait has big plans for its energy sector and that a number of these directly segue into the aims of the BRI. In a hint of what is to come, the Kuwait Petroleum Corp has already indicated that it plans to spend at least $25 billion on new downstream projects in the next 20 years, as the country looks to compete with many of the other regional oil producers that have announced their own plans to extend and refine their petrochemicals capacity. Given the clearly closening ties between Kuwait and China, it is fairly safe to assume that this deepening partnership will play a key role in delivering on all such initiatives.

Geoff de Freitas, Special Correspondent, Kuwait City

Content provided by Picture: HKTDC Research
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