Kuwait (Reuters) – State oil giant Kuwait Petroleum Corporation sees a near 14.1 billion Kuwaiti dinar ($45.7 billion) shortfall in the funds it has available to meet its five-year spending plan, and will need to borrow and sell assets to help plug the gap, a document seen by Reuters showed.
Retaining its annual dividends instead of transferring them to the state budget is “inevitable” during the five years to March 31, 2027, the period of the plan, KPC Chairman Saad Al Barrak said.
The company is planning capital expenditure of 22.05 billion dinars in that time, including about 13.9 billion dinars for exploration and production, Al Barrak said in the Oct. 30 document, a response to a parliamentary query.
“Only keeping dividends will not be enough to cover the expected deficit of about 14 billion Kuwaiti dinars, so the corporation will also borrow and implement some (other) initiatives,” Al Barrak, who is also oil minister, said.
The initiatives include reducing the expected 22.05 billion dinars in capex by 4.36 billion dinars by delaying or removing several projects, assuming other aspects of the total will not be affected, according to an attached copy of the five-year plan.
KPC also expects to keep 3.73 billion dinars from retained dividends, cut its cash balance in half to 500 million dinars, and get 1.55 billion dinars in external financing.
It plans to raise nearly 1.12 billion dinars from leasing the pipelines of subsidiary Kuwait Oil Company (KOC) and offering 50% in a petrochemical complex through a joint venture.
Still, KPC expects another 2.835 billion dinar gap out of the total to fill, for which it will pursue “divesting non-core and unprofitable assets”, the copy of the plan dated October 2022 showed.
KPC confirmed the figures in the document but had no further comment.
The company has for years owed about 7 billion Kuwaiti dinars in dividends to the General Reserve Fund (GRF), which is used to cover state deficits.
Kuwait’s sovereign wealth fund reached an initial agreement with KPC in 2021 on new payment terms for more than $20 billion in accrued dividends.