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Sunday , September 19 2021

Kuwait Petroleum eyes $20bn funding

MUSCAT, March 30: State owned Kuwait Petroleum Corporation plans to borrow as much as $20 billion over the next five years to make up for an expected shortfall in funding, reports Bloomberg, citing a source familiar with the matter. The Kuwait oil giant will need the money to maintain the petrostate’s crude-production levels, stated the person on condition of anonymity. The borrowing plan underscores how badly Gulf countries were impacted by the drop in crude prices last year as the coronavirus pandemic spread and energy demand plunged, said the report.

The company remits almost everything it generates from crude sales to the Opec member’s government. It then gets reimbursed in installments to fund capital expenditure, mainly for upstream operations and investments in oil fields, it stated. The firm may face a deficit of KD 6 billion ($20 billion) over five years, though it hopes to minimize the gap by becoming more efficient, reported Bloomberg. KPC plans to cover the shortfall by issuing debt, including on international markets. The situation will be reviewed every six months to assess the company’s needs and borrowing costs, said the report citing the source.

The Opec member’s financial position – like that of almost all major oil producers – took a hit last year when the virus grounded planes and shut down businesses across the world. The government faced a cashflow crisis and it instructed KPC to transfer more than KD 7.5 billion in dividends to the Treasury, but which the Supreme Petroleum Council had previously said could be retained, said the source. KPC has since reached a preliminary agreement to repay the sum over 15 years. That helps but won’t solve the company’s problem, the source added.

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