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Kuwait cancels land allocation for $10bn chemicals project

22 September 2026

 

Kuwait’s Municipal Council, the country’s top municipal planning and land-use decision-making body, has cancelled the land allocation for the planned Al-Zour integrated complex upgrade programme (Zicup), which is estimated to be worth $10bn.

The site has been reallocated to the planned onshore processing facility (OPF) project, which is being developed in order to process gas from the Al-Dorra offshore gas field.

The OPF project has an estimated budget of $3.3bn.

The Zicup project – also known as the Al-Zour petrochemicals project, or the Petrochemical Refinery Integration Al-Zour Project (Prize) – is expected to be integrated with the $16bn Al-Zour refinery and has faced significant delays in recent years.

The project was originally being developed by state-owned Kuwait Integrated Petroleum Industries Company (Kipic). However, responsibility is being transferred to Kuwait National Petroleum Corporation (KNPC) as part of an ongoing merger.

Kuwait’s Supreme Petroleum Council recently approved the merger of Kipic into KNPC.

The absorption of Kipic into KNPC is part of a broader plan to reduce the number of separate state-owned companies in Kuwait’s oil and gas sector and increase efficiency.

Under the current merger plans, Kipic will cease to exist as a legal corporate entity, with KNPC taking over all of its assets, rights, obligations and liabilities.

Funding questions

So far, no final investment decision has been made on the Zicup project, and there is no public schedule for when the project will be approved or tendered.

The reallocation of the land on which the project was to be built raises new questions about its future, including whether it remains part of the country’s wider chemicals strategy.

In September last year, MEED reported that Kipic was considering relaunching prequalification for the project, but no invitation to prequalify was issued.

At the time, a source said Kipic was looking for a financing arrangement similar to Kuwait’s Clean Fuels Project, which upgraded and integrated two of the country’s largest oil refineries.

For the Clean Fuels Project, Italian export credit agency Sace guaranteed a $625m loan issued by a pool of international banks, led by BBVA’s Milan branch, with BBVA acting as Sace facility agent.

The credit arrangement helped state-owned KNPC finance its $14.5bn Clean Fuels Project, which included modernising and expanding its Mina Abdullah and Mina Al-Ahmadi refineries.

Project delays

In September 2024, MEED reported that Kipic had signalled to contractors that the project was no longer a priority.

In January 2023, MEED reported that US-based engineering company Fluor and South Korea’s SK Engineering & Construction had withdrawn from the bidding process for the project.

Kipic prequalified bidders for the planned petrochemicals complex in April 2021 and published a list of bidders eligible to bid on the project’s three main packages.

The original list of seven groups prequalified to bid for packages one and two comprised:

  • Tecnicas Reunidas (Spain) / Sinopec Engineering Company (China)
  • Samsung Engineering (South Korea) / CTCI Corporation (Taiwan) / Consolidated Contractors Company (Lebanon)
  • Fluor (US) / Daewoo Engineering & Construction (South Korea) / China Huanqiu Contracting & Engineering Corporation
  • Saipem (Italy) / Hyundai Engineering & Construction (South Korea)
  • Technip Energies (France)
  • SK Engineering & Construction (South Korea) / Petrofac (UK)
  • JGC Corporation (Japan)

Package one includes gasoline and olefins units. It was estimated to be worth $4bn and is also known as Gasoline Engineering, Procurement and Construction (EPC) Package 5011.

Package two covers the aromatics units. It is known as the Petrochemical EPC Package 5012.

Package three, known as Marine EPC Package 5013, covered the building of port and export facilities and onshore and offshore pipelines.

Originally, four groups prequalified to bid for package three, estimated to be worth $1.5bn:

  • China Harbour Engineering Company (China) / Saipem (Italy)
  • SK Engineering & Construction Company (South Korea) / Larsen & Toubro Hydrocarbon Engineering (India)
  • Hyundai Engineering & Construction Company (South Korea) / Hyundai Engineering Company (South Korea)
  • Eiffage Genie Civil Marine (France) / Afcon Infrastructure (India) / Daewoo Engineering & Construction Company (South Korea)

The project was first announced in 2006.

Gas processing

State-owned Kuwait Gulf Oil Company (KGOC) is developing the OPF project.

The project was tendered last month with an estimated budget of $3.3bn and a bid deadline of 29 December 2026.

If it goes ahead as planned, the project is expected to be the country’s biggest oil and gas sector contract award in more than a decade.

Earlier this month, MEED revealed that KGOC had rescheduled a key meeting about the development of the planned onshore gas plant.

The meeting with contractors is now scheduled for 14 October 2026. Previously, it was scheduled for 14 September.

Although the initial meeting with contractors was postponed, the bid deadline of 29 December 2026 remained the same.

The proposed plant will have the capacity to process up to 632 million cubic feet a day of gas and 60,000 barrels a day of condensates from the Dorra offshore field, located in Gulf waters in the Saudi-Kuwait Neutral Zone.

In February, MEED reported that at least seven companies had shown interest in participating in the tender.

Contractors that sent representatives to previous meetings to discuss the project include:

  • Samsung E&A (South Korea)
  • Larsen & Toubro (India)
  • Tecnicas Reunidas (Spain)
  • Saipem (Italy)
  • Hyundai Engineering & Construction (South Korea)
  • Hyundai Engineering Company (South Korea)
  • JGC (Japan)

The tender process is using a fast-track model, which means that Kuwait’s Central Agency for Public Tenders (Capt) will not be involved in the tender process.

Iran disputes ownership of the field, referring to it as Arash.

Iran claims the field partially extends into Iranian territory and asserts that Tehran should be a stakeholder in its development.

The Dorra field’s close proximity to Iran could make development difficult due to current security concerns.

The offshore elements of the wider Dorra field development project are expected to be especially difficult to protect from attacks from Iran.

https://image.digitalinsightresearch.in/uploads/NewsArticle/19863538/main.jpg
Wil Crisp

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