Deputy Prime Minister, Minister of Oil, Minister of State for Cabinet Affairs and Chairman of the Board of Directors of the Petroleum Corporation, Dr. Muhammad Al-Faris, revealed that the Kuwait Petroleum Corporation is currently negotiating with the Japanese Export Credit Agency, to provide insurance cover for financing it intends to obtain from a group of international banks, most notably HSBC and JPMorgan not more than one billion US dollars for a period of 13 years, in order to use the amount to finance capital projects, including projects related to oil and gas production.
In his response to a parliamentary question by MP Shuaib Al-Muwaizri, on the authenticity of that has been published by the international media, that Japanese, American and British banks, including HSBC and JP Morgan, loaned Kuwait to boost oil production, and inquired about the reasons behind this borrowing, Al-Faris said, “The KPC is an institution with an independent budget and operates on commercial basis, according to Decree Law 6/1980, and according to this system, the KPC spends on all its costs, whether for operations and management or the implementation of capital projects from its own sources — the cash collected from sales operations, except for what is stipulated in the law establishing the institution in relation to the production and exploration activity of crude oil and gas, which the Kuwait Petroleum Corporation manages on behalf of the state, reports a local Arabic daily.
He indicated that the Corporation is developing its “medium and long-term strategy, to achieve the goals for which it was established on a regular basis, and it has been found that there is a need to invest large sums so that the KPC can implement this strategy and maintain and develop production levels, and given the expected cash flows, it appears that there is a financial deficit that requires obtaining funding from other private sources, in light of the decisions and laws issued to distribute the profits of the Kuwait Petroleum Corporation, which limits the self-resources available to the corporation, so a plan for external financing has been drawn up,” noting that “the approval of the Council of Ministers was obtained to implement it by Resolution No. ( 467 issued on April 17, 2019, regarding the statement of the Ministry of Finance concerning the request of the Corporation to borrow from financial institutions to finance its capital programs during the five-year plan (2018-2022/2019-2023) using public debt instruments.”
He pointed out that “the financing plan includes various debt instruments, including financing through export credit agencies, which are government or semi-government institutions that support the economy of the countries they represent and provide guarantee loans and insurance loans, and the 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 the HSBC and JP Morgan, with a value not exceeding one billion dollars and for a period of 13 years.
