KUWAIT CITY, Nov 20: The Kuwait Petroleum Corporation (KPC) recently secured a $300 million syndicated loan, fully covered by Kuwait’s traditional banks, with varying contributions from each institution, according to informed sources. The medium-term loan is part of KPC’s broader financing strategy to meet its operational and capital expenditure needs. At the same time, the KPC has started preliminary discussions with Kuwaiti banks operating under Islamic Sharia law to explore the possibility of a larger syndicated loan, estimated at almost KD 1 billion. The proposed facilities would be a combination of loans denominated in Kuwaiti dinar and US dollars, aimed at strengthening KPC’s working capital.

Working capital refers to the funds needed to finance day-to-day operations, while invested capital refers to the debt and equity used for long-term investments. The KPC reportedly asked Islamic banks to present their potential contributions, financing conditions and proposed rates for medium-term loans. This financing initiative aligns with KPC’s five-year financial strategy, which includes reduced capital expenditure plans amounting to KD20.2 billion through 2025. Of this amount, KD13.3 billion, or 65 .8% of total expenditure is allocated to exploration and production activities in Kuwait. The company is expected to seek total financing of around KD6 billion during this period, using both local and international commercial and Islamic loans, as well as export credit facilities. As of March 31, 2024, KPC and its subsidiaries reported total long-term loans of KD2.93 billion, compared to KD3.5 billion in the previous financial year. This marks a strategic shift aimed at balancing its financing needs with changing market dynamics in the financial and oil sectors.