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Home»News»Kuwait Petroleum Corporation is facing a $46 billion deficit
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Kuwait Petroleum Corporation is facing a $46 billion deficit

Nadia BarnettBy Nadia BarnettNovember 6, 2023No Comments3 Mins Read
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Kuwait Petroleum Corporation faces a shortfall of approximately $46 billion over the next five years to meet its financial obligations, prompting it to take on loans or sell some assets.

The giant corporation, which includes all oil companies in Kuwait under its banner, expects to draw close to 14.1 billion Kuwaiti dinars ($45.7 billion) in funds to meet a five-year spending plan.

Saad al-Barak, the oil minister and chairman of Kuwait Petroleum Corporation’s board of directors, believes it is “inevitable” that the company’s annual profit will be maintained and not paid to the public budget during the project period, which extends to March 31. 2027.

Profits for petroleum corporations

Responding to a parliamentary question dated October 30, Al-Barak said: “Retaining profits is not enough to cover the expected 14 billion Kuwaiti dinar deficit, as the corporation will have to borrow to cover the deficit. .”

The petroleum corporation plans to spend 22.05 billion dinars ($71.44 billion) in capital, according to the agency. Reuters.

Kuwaiti Oil Minister Saad Al-Barak
Kuwaiti Oil Minister Saad Al-Barak

Oil Minister Saad Al-Barak confirmed on October 9 that his country is still committed to investing in the oil sector during a conference announcing the strategy of Kuwait Petroleum Corporation and its companies 2040 and Energy Transition Strategy 2050. continues to do its part for its global customers.

Kuwait aims to produce two billion cubic feet of non-natural gas and 4 million barrels per day of crude oil by 2035.

The oil sector in Kuwait is responsible for more than 90% of the country’s revenue, so Kuwait Petroleum Corporation has to overcome some difficulties to implement its projects according to its specified schedule. State flow.

Cost reduction programs

Kuwait Petroleum Corporation is reducing expected capital expenditure of 22.05 billion dinars ($71.44 billion) by 4.36 billion dinars ($14.13 billion) by delaying or halting implementation of several projects.

KPC expects to maintain a profit of 3.73 billion dinars ($12.09 billion), halve its cash balance to 500 million dinars ($1.62 billion) and seek external financing worth 1.55 billion dinars ($5 billion).

The company plans to raise approximately 1.12 billion dinars ($3.63 billion) by leasing pipelines owned by its subsidiary Kuwait Oil Company and set up a 50% stake in the petrochemical complex through a joint venture.

KPC expects to fill another gap worth a total of 2.835 billion dinars ($9.19 billion), for which it seeks to “dispose of unimportant and unprofitable assets,” a copy of the plan dated October 2022 showed.

Kuwait Petroleum Corporation logo
Kuwait Petroleum Corporation logo

Kuwait Petroleum Corporation and the Public Investment Authority, which manages Kuwait’s sovereign wealth fund, reached an agreement in 2021 under which the corporation will pay the government about 8.25 billion dinars ($26.73 billion) over 15 years. Each tranche is worth 550 million dinars ($1.782 billion).

The corporation held about 7 billion dinars ($22.68 billion) over the years as dividends to a public reserve fund managed by the Public Investment Authority.

According to the document, 60% goes to the Kuwait Oil Company, 10% to the Integrated Petroleum Company (KIPIC), 8% to the Kuwait National Petroleum Company, 8% to the Kuwait Foreign Petroleum Exploration Company (KUFPEC) and 3% to the Gulf Oil Company, which manages the zone shared with Saudi Arabia.

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Nadia Barnett

"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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