Oil sector eyes leasing current oil and gas pipelines in Kuwait

PHOTO

The oil sector is gearing towards providing rapid liquidity estimated at KD1.116 billion without putting pressure on the budget of Kuwait Petroleum Corporation (KPC) and away from the option of borrowing from local or international financial institutions, reports Al-Anba daily quoting a source from the oil sector.

The source confirmed that the first option of KPC, on which final consultations are underway, is to lease the current oil and gas pipelines belonging to Kuwait Oil Company (KOC) to local or international investors, through contracts extending for about 20 years under the bidding system. The source indicated that Kuwait will lease these pipelines again from the lessee according to specific contracts, with Kuwait remaining the sole owner of the pipelines. He said KPC has contacted the Legal Affairs and Legislation Department about the leasing and re-leasing of pipelines. The source stated that this step is an effective economic option, according to the rules of alternative opportunities, as it will provide billions in financial liquidity within a short time without resorting to the option of borrowing in light of the high-interest rates globally.

The source pointed out that some regional oil companies, such as Saudi Arabia’s Aramco and ADNOC in the United Arab Emirates (UAE) have implemented this mechanism by leasing oil and gas pipeline assets to global investors and it has been proven successful. Meanwhile, the Acting Undersecretary of the Ministry of Public Works Eid Al-Rashidi issued a decision to extend the term of the task force to attend and follow up on the meetings of the Board of Directors of the Central Agency for Public Tenders (CAPT) for three months, starting from November 30, 2023, provided that the team’s meetings are outside the official working hours. According to the decision, the work team is responsible for following up the topics of the Ministry of Public Works related to CAPT, but the presence of all or some of the team members is mandatory to discuss all topics of the ministry and the Public Authority for Roads and Transportation at CAPT.