DOW JONES NEWSWIRES
Kuwait National Petroleum Co. has canceled more than $10 billion
in contracts for a refinery project, including $2.1 billion in
remaining value to Fluor Corp. (FLR), amid the slump in fuel prices
and the project's burgeoning cost.
Flour shares fell 3.6% to $37.42 in premarket trading as the
move will cut the company's backlog as of Dec. 31 by some 6%.
Four South Korean companies earlier said the state-run Kuwaiti
oil firm canceled refinery orders worth $8.36 billion awarded them
in May.
The $15 billion refinery project was in limbo earlier this week
days after it was reported that Kuwait's former prime minister had
ordered its cancellation in a further sign that political chaos in
the state was taking its toll. Both the project's sponsor, KNPC,
and the international contractors building the refinery said
earlier this week they were unaware the project had been
scrapped.
Kuwait's ruler dissolved parliament Wednesday and called for
fresh elections, a move that could end weeks of a political
deadlock that has stalled an economic bailout program for the Gulf
nation's banks.
The project came under increased scrutiny last year after
opposition members of parliament alleged that KNPC's contract
awards didn't comply with the tender procedures set out by Kuwait's
Central Tenders Committee, which handles all public sector
contracts. The project was subsequently referred to the State Audit
Bureau, the country's accounting watchdog.
The project's scrapping comes three months after Kuwait's
parliament forced state-owned Petrochemical Industries Co. to pull
out of a planned $18 billion joint-venture deal with U.S. chemicals
giant Dow Chemical Co. (DOW).
Fluor had approximately 300 employees performing engineering
work on the al-Zour project. The refinery was to have been Kuwait's
fourth, handling 615,000 barrels a day of crude, with the intent of
producing low-sulfur fuel oil for the country's power plants from
2012.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com
-By Oliver Klaus, Dow Jones Newswires; +9714 364 4962;
Oliver.Klaus@dowjones.com