* 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 comment.
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 government.
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 analysis.
"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 2018.
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 Kuwait.
"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."