Stakes in Oil-Company Units Planned to be Sold by Kuwait

As the Middle Eastern government plans to tap global capital markets for funds and improve efficiency in its most important industry, Kuwait is taking steps to sell minority stakes in units of the state oil producer.

Anas Al-Saleh, acting oil minister, said that the shipping and chemical arms of Kuwait Petroleum Corp. and the sales of shares in the international units has been planned to be conducted by the government over a period of four years. He however said that the sale would not include KPC, responsible for the country’s 3 million barrels of daily crude output.

After a supply glut triggered a plunge in crude to a fraction of its 2014 average of close to $100 a barrel, Middle Eastern oil producers are seeking to diversify their economies and develop new sources of revenue. As much as 5 percent of Saudi Arabia’s state producer Saudi Arabian Oil Co. by 2018 has been planned to be sold by the kingdom, the biggest producer in OPEC. Economic overhaul that would involve cutting subsidies and selling some state assets is also being planned by Kuwait in lines similar to that of Saudi Arabia.

“We are looking into privatization,” Al-Saleh said. He said that stakes of 20 percent to 30 percent in the oil units is planned to be sold “definitely soon” by Kuwait.

Al-Saleh said that even as the government studies in greater detail which businesses to sell and when, it is preparing for the initial public offerings. However the government would keep majority control of the energy companies once it listed their shares. Other than to say, “definitely we would not touch anything if it wasn’t worthwhile”, the minister declined to specify dates for the IPOs or estimate how much money they would generate for the government.

Among the candidates for sale is Kuwait Petroleum International. This government oil company owns the Q8 chain of filling stations in Europe and refineries in Asia.

Al-Saleh, who is also the country’s finance minister, said that Petrochemical Industries Co., Kuwait Foreign Petroleum Exploration Co. and Kuwait Oil Tanker Co. are others considered to be sold.

According to the company website, oil and natural gas is pumped in 15 countries in Asia, Africa, Europe and North America by Bottom of Form

Kufpec, as the foreign exploration unit is known.

It said that the company aims to reach a daily output of 200,000 barrels of oil equivalent by 2020 and maintain that level of production until 2030. According to its website, 20 vessels for transporting crude and oil products are included in the Kuwait Oil Tanker’s fleet.

Al-Saleh said that shares in domestic power companies, the postal service, a phone company and local bus operators may be considered for sale by Kuwait in addition to the KPC subsidiaries. While Kuwait had started borrowing locally to cover the budget shortfall caused by lower oil prices, the country also planned to issue international bonds, he had said in May.

(Adapted from Bloomberg)



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