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Kuwait Approves Plan to Set up its 'Largest Oil Company'

Source: Kuwaittimes 10/10/2016, Location: Middle East

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The Ministry of Commerce and Industry (MCI) approved a request from Kuwait Petroleum Corporation (KPC) to set up what would become the largest oil company in Kuwait with an estimated capital of KD 1.8 billion, of which around KD 450 million (25 percent) is paid. The new company will be known as the ‘Kuwait Integrated Petrochemical Industries Company.’ It would serve as KPC’s subsidiary that runs refining and petrochemical projects, including running and executing the integration project between the refining and petrochemical complex in Az-Zour, which includes Az-Zour Refinery, a petrochemical complex and a liquefied natural gas (LNG) importing facility.

It is expected that KPC’s next step would be to offer 50 percent of the new company’s shares in an initial public offering, in order to present investment opportunities for citizens to participate in capitalist oil ventures, though this issue has not been confirmed yet. If this scenario goes through, the company would then be listed in Kuwait Stock Exchange, Al-Anbaa reported quoting unnamed sources.

Deputy Chief Executive Officer (CEO) of Kuwait’s Mina Al-Ahmadi Refinery Ahmed Al-Jeemaz had confirmed two weeks ago that the government and the Supreme Petroleum Council gave their approval to establish the company, saying that it was born giant and very significant “because of its importance in running Az-Zour refinery and terminals to import liquefied natural gas and the presence of an attached petrochemical complex.”

The company’s production capacity will be up nearly at 615,000 barrels per day, becoming one of the largest refineries in the region, Kuwait News Agency (KUNA) quoted Jeemaz, adding that 40 percent of its production will be dedicated to the power stations of the low-sulfur fuel.

Meanwhile, Deputy Premier and Finance Minister Anas Al-Saleh said that Kuwait’s reserves enable it to address challenges resulted from low oil prices. This financial surplus helped the government of Kuwait take “well calculated” decisions, Al-Saleh, also Acting Minister of Oil, said during an interview with Sky News Arabia channels. Kuwait’s “wise financial and economic policies it has been following for more than 60 years have always succeeded in creating surplus which is transferred to the next generations fund,” said Al-Saleh.

He noted that revenues from investments are not included in the state general budget. Al-Saleh the government’s budget was based on an oil barrel with $66, but Kuwait’s ability to address the low prices was limited. However, he added, the government sought to activate reforms to lower spending. Al-Saleh said the government borrowed around KD two billion from the local market, in addition to plans to borrow KD three from foreign markets.

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