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Kuwait grants exceptional payment facilities to China Move could lead to conflicts with India

 KUWAIT CITY, August 20: Kuwait granted exceptional facilities to China when it signed a contract for the export of 300,000 barrels of oil per day — a first in the history of the Kuwaiti oil sector, reports Al-Rai daily quoting sources. Sources warned this might lead to conflicts or disagreements with Kuwait’s other clients, particularly India which imports about 350,000 bpd and is considered one of the biggest clients of Kuwait.  Sources said the International Marketing Sector at Kuwait Petroleum Corporation (KPC) has provided China — for the first time — with facilities to pay dues within 60 days despite the fact that the maximum grace period for other clients, including the South Korean clients, is 30 days only.

Sources added the contract signed with China obligates Kuwait to export 300,000 bpd as per the international price. Sources clarified this is in fact the renewal of a previous contract for the export of only 170,000 bpd and payment within 30 days. Sources pointed out that if the average price of per barrel of oil is $100, the payment facilities which China receives in 10 years are estimated at $1.8 billion — an exorbitant cost for the Kuwaiti oil sector. Sources said some oil sector officials are worried because other clients might demand for similar facilities upon renewal of their contracts with KPC and Kuwait could incur huge losses if this happens.
Sources added the officials also warned about the possibility that the contract may lead to internal conflicts over future strategy at KPC, because this obligation will negatively affect the quantity of oil required for export to implement projects in exterior refineries in China and Vietnam as per the agreements signed by Kuwait. Sources alleged some parties intend to harm the external refinery projects even if they are part of a strategy approved a long time ago.

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