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Kuwait Approves $12 Billion in Oil Infrastructure Investment

In effort to improve and enhance its refining capacity, Kuwait approved $12 billion in investment to upgrade two oil refineries. Pumping billions into Kuwait’s largest oil refineries is also a key plank in the government’s 30 billion dinar ($106 billion) economic development plan. Known as The Clean Fuels Project, the upgrades will target Kuwait’s existing refineries. Separately, Kuwait also plans to close down old refineries and build new ones. Taken together, the overhaul will increase Kuwait’s refining capacity from the current level of 936,000 barrels per day up to 1,415,000 barrels per day.

The Kuwait National Petroleum Company announced the plan on February 10, awarding billions of dollars in contracts to foreign firms. Japan’s JGC Corp won $4.82 billion to fix up the Mina Ahmadi refinery. Petrofac, a British company, was awarded $3.79 billion and the U.S-based Fluor Corporation won $3.4 billion – both to work on the Mina Abdullah refinery.

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The details of Kuwait’s economic development plan, originally devised in 2010, come as the country deals with some political turmoil in its oil sector. Kuwaiti oil workers planned to go on strike in recent weeks due to unhappiness over salaries, which threatened to put a stop to the country’s main source of revenue. Government-owned oil companies scrapped an annual bonus that had been paid in previous years, causing the Kuwait Oil Workers Union to plan a strike for February. The union has argued that Kuwaiti oil workers only earn about half of what their counterparts make in Saudi Arabia, UAE, and Qatar. The union represents 19,000 workers in the oil sector. The two sides came together at the last minute to avert a strike, with the Kuwait Petroleum Corporation agreeing to reinstate the bonus, but at a lower level. Still, the union only postponed the strike until March, holding out for more concessions. The government insisted that it will take measures to replace workers should a strike take place in order to avoid disruptions at its oil installations.

By Joao Peixe



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