Refinery Blast to Cost Kuwait Hundreds of Millions of Dollars

Published June 26th, 2000 - 02:00 GMT

The damage from a deadly blast which rocked Kuwait's biggest and oldest oil refinery will run into hundreds of millions of dollars, an oil expert warned on Monday. 

"The extent of damage in Al-Ahmadi refinery is 80 percent, and the cost of repairing it will be around 300 million dollars," Hajjaj Boukhdour told AFP. 

"I would rather advise the government to forget about repairing the outdated refinery. They should plan to establish an entirely new one," following Sunday's blast, said Boukhdour, a senior official with the United Arab Shipping Company. 

But a new refinery incorporating state-of-the-art technology would cost at least 400 million dollars and take two years to complete, he said. 

According to an initial assessment, an oil distillation unit with a capacity of 122,000 barrels per day (bpd) was extensively damaged and another with 120,000 bpd capacity suffered medium damage in the explosion caused by a gas leak. 

Al-Ahmadi's main unit of 200,000 bpd was unaffected. 

Sami al-Rushaid, assistant chairman of operator Kuwait National Petroleum Company (KNPC), said the complex would stay closed for "up to 10 days" for damage assessment and repairs. 

According to Boukhdour, Kuwait and other oil-rich Gulf states must now start seriously working to upgrade the outdated technology still being used in the oil sector. 

"This, of course, can not be achieved without the assistance of foreign companies. Kuwait has no option now but to seek technological assistance from international oil majors," he said. 

Kuwait's other costs may come in the form of lost clients for refined products who would look elsewhere for supplies. 

"There are new refineries in Iran and the United Arab Emirates ready to take over. Some of Kuwait's clients may simply refuse to be compensated with crude," as offered by Kuwait, Boukhdour said. 

Forty percent of Kuwait's oil exports are in the form of refined products, while the emirate currently has an OPEC output quota of 1.98 million bpd. 

Oil Minister Sheikh Saud Nasser al-Sabah announced his resignation on Monday after taking political responsibility for the Al-Ahmadi blast that killed five workers and injured 50. 

Sheikh Saud, whose resignation has yet to be accepted, said only eight of the injured remained in hospital for further treatment - KUWAIT CITY (AFP) 

 

© 2000 Al Bawaba (www.albawaba.com)

You may also like