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Kuwait Petroleum suffers spending decline due to liquidity crisis

Kuwait Petroleum

The Kuwait Petroleum Corporation is suffering from a significant decline in spending on its companies and planned projects in light of a liquidity crisis afflicting it.

Al-Rai, a local newspaper, said that the percentage of spending of Kuwait Petroleum and its companies on the planned projects decreased by 26.1%, which is a huge rate.

It also declined from 3.356 billion dinars ($11 billion) to 2.479 billion ($8.1 billion), due to internal and external factors.

The newspaper said the internal factors include demanding it to pay the profits of previous years to the public treasury, in addition to the failure of a number of government agencies to pay their dues in return for services he corporation provided.

On the external level, sources attributed the reduction of expenses to the negative pressures that faced the oil markets with the spread of the Coronavirus pandemic.

The sources pointed out that the expected effects on the corporation are multiple, and include difficulty in fulfilling capital commitments, low crude oil and gas production rates, refineries not working at their full capacity, and poor ability to fulfill contractual obligations with contractors, and then they stop working and affect the safety of oil reservoirs.

One of the challenges that deepens the liquidity crisis of Kuwait Petroleum is the growing fears of the leaders after the continuous accusations against them and their children, which negatively affected the performance of the sector, and raised the volume of risks that are classified and evaluated by the corporation, the sources added.

The controversy that has always arisen between the institution and a number of state institutions threatens to embarrass it in front of its counterparts and financing institutions, and weakens its data before international rating agencies.

The sources emphasized that despite the existence of a mechanism for making decisions in the oil sector through a tight institutional system, and the fact that decisions are taken through specialized committees, these decisions are questioned which ultimately hinders the provision of remedies to the liquidity crisis.

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