The state-owned Kuwait Petroleum Corporation is seeking to borrow up to $1 billion from banks including HSBC and JPMorgan, according to a parliamentary document reviewed by Reuters.
“The Kuwait Petroleum Corporation is currently negotiating with the Japanese export credit agency to provide insurance cover for the financing that the corporation will obtain from a group of international banks, including HSBC and JPMorgan, with a value not exceeding $1 billion for a period of 13 years,” Oil Minister Mohammad al-Fares said in response to a lawmaker’s inquiry.
The financing will be used for capital expenditure, including on oil and gas production, Fares said.
“It was found that there is a need to invest large amounts of money in order for the corporation to implement (its five-year) strategy and to maintain and develop production levels,” he said.
An external borrowing plan for KPC was approved by Kuwait’s cabinet in April 2019 for the financial years 2018/19 to 2022/23.
Kuwait’s cabinet, and many of its predecessors, have failed for years to pass a debt law that would raise the debt ceiling and allow the state to tap international debt markets amid pushback from successive parliaments.
Oil makes up nearly 90% of Kuwait’s revenues. Despite high oil prices, Kuwait forecasts a fiscal deficit of 3.1 billion dinars ($10.12 billion) in the fiscal year that began on April 1, down 74% from a year earlier.
Kuwait had previous plans to raise production capacity to four million barrels per day in 2020, but it did not achieve this. According to the Kuwait News Agency, it has a new plan to reach 3.5 million barrels per day in 2025.
In 2018, Kuwait had also said it plans to reach 4.750 million barrels in 2040.
Source: Reuters (Reporting by Ahmed Hagagy in Kuwait; Writing by Yousef Saba in Dubai; Editing by Simon Cameron-Moore)