Kuwait Plans Refinery In Louisiana.

Kuwait and Louisiana have signed an initial agreement to study building a joint venture oil refinery in the southern US state. Kuwaiti Oil Minister Shaikh Ali al-Jarrah al-Sabah and Louisiana Governor Kathleen Blanco said, after signing a memorandum of understanding, that the size of the refinery and its cost were yet to be determined. "This MoU establishes Kuwait's strong interest in Louisiana as a viable site for the first greenfield crude oil refinery in the US in 30 years", Blanco said. (Kuwait is studying plans to build a multibillion-dollar refinery and petrochemical plant in south China with PetroChina and recent reports said it may enter into joint venture refining dealsin India).

A statement said the officials discussed Kuwait's desire to increase refining capacity in the US, and that Blanco requested that such new capacity be added in Louisiana. It said the accord between Kuwait Petroleum Corp. (KPC) and Louisiana sets up teams "to explore the steps, approvals and incentives required for the project's viability". Asked how many foreign companies may join the project, the minister said: "We have not specified that but the partner from the other side should be a major oil company". He said KPC was studying other such refinery projects. Blanco said no oil majors are involved yet but addedthat Shaw Group, a US construction firm based in Baton Rouge, Louisiana, is proposing to be a joint venture partner.

Blanco said her state moved 26% of the US natural gas supply and 25% of the nation's crude oil supply. "Louisiana's energy corridor equals $150 billion in annual energy value", she said. "By 2011, 80% of the increased production in the US will come from the Gulf of Mexico". She said the project may need state legislature approval, dependingon how it is put together, but added there was "a great deal of positive interest on behalf of the legislature".

Michael Olivier, secretary of state-run Louisiana Economic Development said: "The Kuwaitis know what the market is...they know that there is a refining capacity deficit". He said permits could be expedited in a state that has 17 oil refineries, over 90 petrochemicals firmsand 40,000 miles of oil and gas pipelines.

KPC runs the upstream and downstream sectors in Kuwait, which produces 2.5 million b/d of oil and has a domestic refining capacity of 930,000 b/d from three refineries.