* All three refineries shut by power outage in January
* Reliant on national grid, no UPS
* Country afflicted by electricity supply shortage
* Management, distribution equipment may also be to blame
* Not clear whether or when precautions will be taken
By Sylvia Westall and Daniel Fineren
KUWAIT/DUBAI, Feb 16 Kuwaiti oil refineries are
at risk of more shutdowns because of an inadequate power supply
system, which has blighted the oil producer during years of
rapid demand growth and underinvestment.
The exact cause of the power failure that shut down all
three of the country's oil refineries with a total capacity of
around 930,000 barrels per day late last month is unclear.
Officials have not discussed the specific cause publicly;
officials at the electricity ministry were not available to
But the fact that three complexes - the 460,000 bpd Mina
Ahmadi, 270,000 bpd Mina Abdullah and 200,000 bpd Shuaiba
refineries - were all knocked out at the same time suggests the
fault lies with the state electricity supplier, not onsite
electrical faults, analysts and industry officials said.
"Power was cut from the source," a spokesman for Kuwait
National Petroleum Co told Reuters.
Refinery outages are common around the world, and last
month's incident was not the first time that three refineries
were hit simultaneously. A substation shutdown last April caused
major problems at three neighbouring refineries in Texas,
sparking a fire at one and briefly shutting multiple units at
the largest U.S. refinery in Port Arthur.
But those refineries make up just 6 percent of total U.S.
capacity. Last month's closures in Kuwait halted all fuel
production in the country, and it was a week before all three of
its refineries returned to normal.
Kuwait, one of the world's biggest crude oil producers,
refines about a third of its crude production of 3 million bpd
and exports around 660,000 bpd of those petroleum products,
according to OPEC figures.
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The Ministry of Electricity and Water is Kuwait's sole
supplier and manager of electricity supplies. Ultra-low
electricity prices give residents little incentive to limit
their use of air conditioning in one of the world's hottest
climates, helping make Kuwait the fourth biggest per capita
energy consumer in the world, according to the World Bank.
A study by CESI Middle East, a power sector consultancy, for
the League of Arab States forecast annual growth in Kuwait's
peak demand of between 5 and 6 percent up to 2030.
At the same time, despite its wealth, Kuwait has failed to
modernise and expand its infrastructure or attract many foreign
investors to do it, largely because of persistent political
squabbling and dense bureaucracy. Contracts are often delayed or
cancelled because of parliamentary pressure or changes of
In the latest example, Kuwait's parliament voted on Feb. 5
to investigate a contract awarded to a GDF Suez-led
consortium to build a 1,500-megawatt power generation and
drinkable water complex. The Al-Zour complex had originally been
expected to start supplying the country in 2014, a date which
was pushed back to 2016.
A shortage of natural gas to feed power plants also strains
stability of electricity supplies, especially in summer when
Kuwait relies on costly imports of liquefied natural gas shipped
in from around the world to meet a seasonal demand surge.
"Kuwait is perpetually in a state of electricity supply
shortage and experiences frequent blackouts and brownouts each
summer," the U.S. Energy Information Administration said in an
"In the past decade, the development of Kuwait's electricity
sector has stalled because of political factors and lack of
investment, despite average annual demand growth of 6 percent."
Many refineries in other countries have uninterruptible
power supply (UPS) systems that include onsite generators to
keep control systems going when external supplies fail. Some UPS
facilities can even keep large parts of a refinery running.
In Kuwait, however, "the refineries are 100 percent
dependent on the national grid. They don't have internal power
generation and that's why they are very prone to power loss," a
Kuwaiti industry source said, declining to be named because of
the sensitivity of the subject.
"It has happened before but it happened for a much shorter
duration...Sometimes it happens for minutes, or a fraction of a
minute even. But this time it took more than one hour. This made
it very difficult to restart."
Although there are relatively small power cuts from time to
time, the last major outage happened a year ago, and there was a
big one about two years before that, the source said. Last
month's outage was most severe.
"Imagine you are driving your car at 200 (kilometres per
hour) and suddenly all the systems cut out - how can you control
everything? It is very serious."
Relatively cool winter weather in Kuwait last month suggests
a simple imbalance of power demand and supply may not have been
the reason for the refinery outages, however.
The industry source said the reason may have been a mistake
in power flow management that temporarily kicked the refineries
off the grid. Industry analysts said Kuwait's ageing power
distribution equipment might have been to blame.
"In the case of important loads such as refineries, the grid
should be endowed with a back-up distribution supply, so if
there is a fault on a feeder, power will be supplied
automatically through an alternative," said Floris Schulze, head
of CESI Middle East.
"Prolonged out-of-services of oil refineries are often due
to uncoordinated protection relays inside the plant causing a
sudden load shedding, with consequent damage of the mechanical
equipment and the chemical process."
The Al-Zour project is to include a 615,000 bpd oil
refinery, planned since 2008 as a replacement for the ageing
Shuaiba site. But completion has been delayed until at least
Earlier this week, Kuwait approved multi-billion dollar bids
from foreign companies to upgrade the Mina Ahmadi and Mina
Abdullah refineries; contracts are expected to be signed in
April and work should begin shortly afterwards.
But it is not clear whether the $12 billion "Clean Fuels
Project" includes back-up power supply systems - or whether it
will go ahead on schedule, given the past record of projects in
"The new (Al-Zour) refinery is the same story - it is being
debated," the Kuwaiti industry source said.
"It will depend on the ministry, and the ministry insists
that it will have sufficient capability to supply the new
refinery and the clean fuels project."