Closure of Shuaiba Refinery

Frequently Asked Questions

The refinery was officially inaugurated in April 1968 with a refining capacity of 95,000 bpd. In 1975, the capacity was expanded to 200,000 bpd, equaling 20% of KNPC total refining capacity.
Product * Ton per Day
Rich gas for LPG plant 298
Naphtha 3546
Mogas / Reformat 616
Kerosene/ATK 4788
Gas oil / Diesel 5136
Fuel oil / Residue 7925
Other products 308
* As per the Fiscal Year 2015/2016
The conducted studies showed that upgrading of the Shuaiba refinery is uneconomical for the following reasons:
  • The outdated technologies used in the refinery, compared with modern technologies, negatively affected the environmental and economic performance.
  • The limited available land space inside the refinery constrained the upgrading possibilities and improving the environmental and financial performance.
  • The obsolescence of units and facilities caused repeated malfunctions and long shutdowns.
  • The necessity of huge financing for maintaining the refinery operations and other basic operation, industrial safety and environment protection.
In 2004, following the Petroleum Supreme Council decision, which was according to the recommendations of KPC and KNPC after extensive studies.
 
Upgrading requires building new units with different technologies, which need more space. Shuaiba area is limited.
 

When the refineries upgrading options were reviewed, a technical and economic study was made for Shuaiba. The environmental and world markets requirements were taken into consideration. All studies concluded that the upgrading of Shuaiba refinery was thorny. demanding tough. Consequently, PTC and KPC Board decided in 2014 to close the refinery. The closure was tied with Al-Zour refinery project progress.

In 2007, KNPC conducted a re-evaluation study for upgrading the refinery, and again it was confirmed that it was unfeasible. The minimum internal ROI was negative even after upgrading.

Yes; in 2008, an international consultant made a study, which also confirmed that the upgrading of Shuaiba refinery was much challenging due to the limited available space.

The refinery revamping was considered in order to improve the level of safe and easy operation on the long-term. The possible technical and economic options for improved reliability, conversion rate were reviewed. As well, the ability to produce high-quality products that are in line with the international specifications while maintaining high safety and environment standards were also examined.

The study concluded that the Shuaib refinery should be closed due to economic reasons.

Due to the limited land space a long time passed since the refinery was upgraded. A general turnaround was made 2010, and two units were added to improve the environmental performance.
New conversion units will be built in MAA and MAB refineries. Shuaiba could not fit them in. Al-Zour refinery is the alternative for Shuaiba. It will produce low sulfur fuel oil and other environment-friendly products.
 
It was not a ceremony, but merely an activity to express gratitude for the 50 years efforts of first pioneers and employees.
We are greatly concerned with our workforce. These vital resources are behind KNPC success. We have ready plans to reassign Shuaiba employees to the three refineries (MAA, MAB and ZOR). They will be trained to work in the new units at CFP and ZOR projects.
 All Kuwaitis working with our contractors will be incorporated in various sites, and no one to be released.
 
Shuaiba refinery is mainly composed of 3 parts: Process units, storage tanks and export facilities. We closed the process units only; whereas the tanks and export facilities will continue as usual, and will be part of CFP at MAB.
 

Shuaiba closure has no effect on gasoline supplies. We used to import gasoline as it was cheaper than Shuaiba production. Currently, it is produced by new units at MAA.

However, imports of gasoline will be for a limited time only during the shutdowns for GRTA and until the CFP is fully commissioned. Two new units are part of CFP.

It will be sold in the international market with a better profit margin than processing at Shuaiba. Nevertheless, this will not contradict with Kuwait production reduction commitment according to OPEC agreement with non-OPEC countries. Kuwait will maintain production as agreed.
 
The closure will end the years-long streak of losses, and will be positively reflected in the company’s financial performance as well as Kuwait’s. Meanwhile, MAA and MAB have recorded positive results.
 

The sales and achieved profits of the refinery do not cover its operation costs for 2016/2017 until February 2017 with total loss of US$ 70 million, i.e. US$ 1 loss per refined barrel. Since 2011/2012 fiscal year, the refinery recorded total losses of US$ 892 million, as follows:

Fiscal Year Loss (Million US$)
2011/2012 114
2012/2013 173
2013/2014 95
2014/2015 284
2015/2016 156
None whatsoever. Through MAA and MAB refineries, KNPC shall continue fulfilling the local market with all needed products.
Currently, KNPC has no intention to sell the refinery as junk. We are preparing to sell the unit in one package.

KNPC works in line with KPC 2030 strategic directives for Kuwait downstream, which mainly aim to fulfill the local and international market needs by increased capacity and high-quality products, especially diesel and gasoline, with less than 10ppm in sulfur content. Hence, we are currently carrying out the CFP, ZOR, gas trains and other projects.

We are seeking to achieve the KPC oil sector downstream unified mission and future vision which aim to maximize the added value of Kuwait hydrocarbons through refining, local and international marketing as well as fulfill the needs of Kuwait needs for low-sulfur fuels.

The closure of Shuaiba refinery is part of these strategic objectives, and with CFP and ZOR projects, our refining capacity will increase from 900,000 bpd to 1.4 million bpd.