The state-owned oil company of Kuwait plans to borrow nearly $20 million over the next five years to make up for an expected shortfall in funding. The petroleum company needs the money to maintain the Petrostates crude production levels.
The plan to borrow shows how badly the Persian Gulf countries were impacted by the drop in crude prices due to the pandemic spread. Kuwait petroleum remits almost everything it generates from crude sales to the organization of the petroleum exporting companies member. Then it gets reimbursed in installments to fund the capital expenditure. This includes the upstream operations and investment in the Oil fields. The petroleum industry faced a deficit of $19.9 billion over the past five years and it hopes to minimize the gap by becoming more efficient.
The government faced a cash flow crisis and it instructed the petroleum firm to transfer more than 7.5 billion dinars in dividends to the Treasury, but which the Supreme Petroleum Council had previously said could be retained. The company reached a preliminary agreement to repay the sum over 15 years.
Oil accounts for 90% of its revenue. The nation pumps around 2.4 million barrels of crude a day, making it the fourth-biggest member of the Organization of Petroleum Exporting Countries. Last month, the government sought permission from parliament to withdraw money from the sovereign wealth fund for the first time since the Gulf War in 1990.