Chicago Bridge & Iron Company N.V. (CBI - Analyst Report) recently announced that its joint venture (JV) with Petrofac International Ltd. and Samsung Engineering Co., Ltd. has received a contract from Kuwait National Petroleum Co. (KNPC). This JV won the bidding process to revamp and upgrade the Mina Abdullah I refinery project, an upcoming clean fuel refinery in the Middle East region.
The $12 billion bid for the two refineries, Mina Abdulla and Mina Al-Ahmadi was approved on Feb 10, out of which the JV received the contract for $3.8 billion (1.07 billion dinars). CBI, which has a share of 10% in the contract, will provide services worth $370 million. The other winning companies were Foster Wheeler AG , JGC Corporation and Fluor Corp. (FLR - Analyst Report).
As per the terms of the deal, CBI is to provide engineering and procurement services for the refinery having a present capacity of 270 thousand-barrels-per-day (bpd). The company will undertake the installation of a couple of units designed to desulfurize atmospheric residue at the facility. These units will enable KNPC to keep the sulfur content to a low of 1%, thereby meeting the international environmental standards for clean fuel.
These aforementioned units had earlier been licensed to Chevron Lummus Global, which is a JV of CBI and Chevron Corp. (CVX - Analyst Report).
Kuwait National Petroleum is planning to expand the combined production capacity of the two refineries to as much as 800 thousand bpd from the current capacity of 736 thousand bpd. The increased production of eco-friendly fuel is expected to meet the growing demand for low-sulfur containing transport fuel.
At present, CBI has a Zacks Rank #4 (Sell).