KUWAIT CITY

Kuwait's Supreme Petroleum Council has endorsed a request to sharply increase the budget for a new refinery after most of the bids exceeded initial estimates, the oil minister said Tuesday.

Ali al-Omair said the figure for the Al-Zour refinery was increased by 871 million dinars ($2.9 billion/2.7 billion euros) to 4.87 billion dinars.

That came after bids for most tenders for the five packages constituting the refinery project came in higher than the estimated cost.

Tenders are expected now to go ahead, and some contracts are likely to be awarded as early as next month.

The initial capacity of the state-of-the-art refinery was 615,000 barrels per day, but Omair said the capacity will now range between 600,000 and 800,000 bpd.

Last year, Kuwait awarded tenders for a $12-billion project to upgrade two of the three existing refineries.

When that work is completed by around 2018 and the new refinery is built, Kuwait's refining capacity will increase to 1.4 million bpd from 930,000 bpd currently.

Omair said an estimated $60 billion will be spent on oil projects over the next five years to modernise the oil sector and to raise production capacity to 4.0 million bpd.

Kuwait says it sits on 10 percent of the world's proven crude reserves and is pumping 2.8 million bpd.