Scraping the barrel? Kuwait Petrol seeks loan for $10 billion

Published February 17th, 2016 - 05:36 GMT
An oil refinery draws out the skyline. (Twitter)
An oil refinery draws out the skyline. (Twitter)

Kuwait National Petroleum Co. is looking to borrow $10 billion from local and international banks to upgrade two refineries to produce cleaner burning fuel. Deputy chief executive officer at the state oil refiner, Ahmad al-Jemaz, says local banks are likely to agree with favorable terms to lend $3 billion to Kuwait. The remaining $7 billion required will be sought from international lenders, including South Korean banks.

"We have seen a good response to our request for loans to finance the project," Jemaz said to reporters in Dubai on Monday.

Over the past two years, Kuwait has spent more than $35 billion on oil, gas and petrochemicals projects, spending much more than other Middle Eastern nations, according to Meed research. Naveen Ahmed, analyst at Global Investment House KPSC in Kuwait, said on Monday that loan rates for to upgrade the two refineries might amount to less than 4.5 percent.

"The banks will be jumping at deals like these," Ahmed said. "These projects are relatively low-risk because they're being carried out by government-related entities or are public-private partnership projects."

The loans are to be invested into Kuwait's Clean Fuels Project to upgrade the Mina al-Ahmadi and the Mina Abdullah refineries. The project will produce diesel and jet fuel for domestic use and export. Its due date for completion is 2019. According to reports Mohammad Ghazi al-Mutairi, chief executive officer of KNPC, provided to Kuwait's official news agency KUNA on Tuesday, the hydrocracker unit at Mina al-Ahmadi started producing 42,500 barrels a day.

The Mina Abdullah refinery's capacity will be increased to 454,000 barrels a day from 270,000 barrels a day and the Mina al-Ahmadi plant's capacity will be decreased to 350,000 barrels a day from 466,000 as one of its main crude processing units is retired, Jemaz said.

Other plans in Kuwait include a $30 billion refinery to produce 615,000 barrels a day, a petrochemical plant and a liquified natural gas receiving terminal at Al-Zour on the Gulf coast. Financing options include selling shares to the public in the petrochemical unit and joint ventures, Jemaz said.

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