Kuwait KIPIC, banks ink $2.3bln pact to fund LNG project

Kuwait's new sea port to work in 2021

  
Image used for illustrative purpose. Sunset over Marina Crescent, Kuwait City.

Image used for illustrative purpose. Sunset over Marina Crescent, Kuwait City.

Getty Images/Emad Aljumah

KUWAIT CITY - Kuwait Integrated Petroleum Industries Company (KIPIC) signed a contract with the local and foreign banks to finance the company’s $2.3 billion Liquefied Natural Gas (LNG) import, reports Al-Anba daily.

The National Bank of Kuwait and Kuwait Finance House (KFH) will jointly put up $500 million for the project. However, the sources said all traditional local and Islamic banks are involved in local financing with different financing ratios.

With regard to foreign financing of the project, the sources said that the National Bank of Kuwait led the global coalition of banks and the South Korean export guarantee companies worth about $2 billion, as the export credit agency agreed with the Kuwaiti side and the international banks and other financing channels involved in the financing process to conclude foreign financing contracts.

The total cost of the project is estimated at one billion dinars, equivalent to 3.3 billion dollars, of which 30 percent is self-financing from the Petroleum Corporation (about $1 billion) and $2.3 million or 70 percent is fully funded by various financing channels, whether local or international.

Sectors

The Liquefied Natural Gas (LNG) port is a key element in the expansion plans for energy and related sectors in Kuwait. The port will be the property of KIPIC after transfer of its ownership and management from KNPC.

This is one of the strategic projects that Kuwait has started to accommodate future imports of liquefied natural gas (LNG) during summer periods to replace the mobile gas import facilities that are used for temporary periods through leasing at the Ahmadi refinery from outside companies and institutions to reduce the financial cost.

The project facilities are currently being implemented at the sea side of the Zour refinery project next to the sulfur loading port for the refinery on an area of 725,000 meters away from the coast by 700 meters.

Under the project, a two-seater sea port will be constructed in sizes ranging from 122,000 cubic meters to 266,000 cubic meters.

The project is scheduled to be fully operational in the first quarter of 2021. The project comprises two ports and offshore facilities, 8 liquefied natural gas reservoirs and a manufacturing area, as well as infrastructure and facilities for the project.

The project includes the establishment of large-scale permanent facilities that will allow the supply of 3,000 million BTUs (British thermal unit) per day of natural gas to the national grid to various consumers to meet growing domestic energy demand.

The Kuwait National Petroleum Company deal signed in mid-2016 is the largest bank financing in the history of Kuwait for the clean environmental fuel project in the first tranche worth KD 1.2 billion with local banks led by National Bank of Kuwait and the Kuwait Finance House (KFH).

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