Sheikh Nawaf Al-Sabah, CEO of the Kuwait Petroleum Corporation, said that the corporation’s estimates indicate that the market is losing about 6 million barrels per day of refined products at the present time.
The Iran war caused the closure of the Strait of Hormuz, through which about 20 percent of global oil and gas supplies passed, in addition to damage to some energy infrastructure assets in the Gulf states as a result of the war, which reduced production.
Al-Sabah added, at an energy forum in London on Monday, that there is an abundance of crude oil in the market but not refined products. This is after the recent improvement in navigation traffic in the Strait of Hormuz.
He stated: “We need to focus on removing refined products from the Gulf region to relieve bottlenecks in the region’s refineries.”
He pointed out that the Kuwait Petroleum Corporation is holding “conversations with our European partners and informing them that they need logistical services that include storing refined petroleum products.”
He said that this happens when “we use ship-to-ship transfers despite the ongoing attacks... We were able to do this by using our strategic fleet of tankers.”
Al-Sabah stressed that “there is no shortage of crews in our tanker fleet... and we have direct ownership of our tankers,” noting that “some of our customers use their own tankers to come to the Gulf region, and more will follow suit.”
The CEO of the Kuwait Petroleum Corporation explained that the Corporation does not offer discounts or insurance to customers who bring their tankers to the Gulf region.
Regarding production capacity, Al-Sabah said that the corporation is on the right track to achieve the goal of reaching a crude oil production capacity of 4 million barrels per day by 2035.
Kuwait Petroleum Corporation currently produces about two million barrels per day, down from 2.6 million barrels per day before the start of the Iran war.
He stated that his company is holding talks with Saudi Arabia and the UAE regarding pipelines to reach their ports, in order to facilitate increasing oil exports, noting that the corporation is studying “increasing local storage capacity and in our three refineries abroad.”
But he stressed that “pipelines and stocks are no substitute for freedom of navigation through the Strait of Hormuz.” He said that oil importing countries also need to pump investments, not just exporting countries, in reference to the large amount of investments that the global energy sector needs during the coming period.
The “optimistic” official aspirations in Lebanon regarding the imminent conclusion of the initial agreement with the International Monetary Fund have turned into the reality of “waiting” with no specific time, awaiting the issuance of the Constitutional Council’s decision regarding the appeal submitted by the President of the Republic, Joseph Aoun, to Article Three of the Banking Reform Law, due to the deletion of the phrase “taking into account the provisions of the Monetary and Credit Law,” which was originally included in the provisions of the project referred by the government.
It is no secret, according to a concerned financial official, that the difference in visions between the authorities automatically reflects an aspect of the ongoing political and sectoral conflict in determining the authority “authorized” to manage the bank restructuring process, which is expected to extend with greater intensity, to the draft law to restore financial stability and recover deposits, which in turn has wandered in the corridors of the government that approved it at the end of last year, and did not complete its way to the House of Representatives, after widespread objections that forced consideration of amending pivotal articles by a ministerial committee. With partial participation by the Central Bank Governance.
The response by a spokeswoman for the Fund’s management, following the disclosure of the presidential appeal, and after “fruitful” discussions with a high-level Lebanese delegation in Washington, contained a veiled reference to linking the conclusion of the initial agreement to the desired reform package, which includes “the entry into force of the law to address the conditions of banks,” in addition to approving appropriate laws to address the financial gap, provided that they are compatible with international standards, in addition to the need to approve next year’s budget, and adopt a medium-term financial framework that is compatible with the sustainability of public debt in the country.
Indeed, the financial tour of the delegation, headed by Prime Minister Nawaf Salam and Minister of Finance Yassin Jaber, recorded qualitative progress, according to the financial official contacted by Asharq Al-Awsat, in terms of the Fund’s management being convinced of the possibility of signing the second version of the initial agreement with Lebanon before the end of the current year, with the aim of motivating and encouraging the Lebanese authorities to work to accelerate the pace of completion of the legislative trilogy by approving the pivotal draft law, that is, the law on the gap and distributions of losses, which allows the start of implementing the provisions of the bank restructuring law.
These data coincided with a statement by Minister Jaber in Washington, prior to the announcement of the appeal, in which he confirmed through the official digital platform of the Ministry of Finance that “the goal at this stage is to activate the path of the agreement with the IMF and to seek progress towards an agreement at the employee level, as a preliminary step that precedes reaching an integrated program, which in turn is linked to completing the required reforms, foremost of which is the approval of the financial gap law.”
Thus, the new “appeal” reflects some features of the ongoing confrontation, and the fact that there is a political “gap” at the governmental and parliamentary levels, and likewise within the financial sector, with regard to policies and treatments for approving clear legislation to address and distribute financial losses, where there lies an intractable problem that goes beyond the issue of determining the state’s debts to the Central Bank, which is estimated at about 64 billion dollars, to lie in a precondition for the fund, which enjoys government support, stipulating limited use of public funds to bridge the financial gap.
Fears are no less, in its purely legal dimension, about returning to the “zero” point, as the Constitutional Council’s oversight is not limited to Article 3 alone. Rather, through the appeal referred to it, it can review and invalidate any article in which it deems constitutional defects, especially skipping Article 70 of the Monetary and Credit Law, which essentially places the suspended law in front of the possibilities of redrafting and approval, while the parliamentary committees are supposed to begin discussing the numbers and materials of the general budget, in preparation for referring it to the General Assembly. It will be approved before the end of the first month of next year.
It is clear, according to the financial official, that the resolution of the dispute by the Constitutional Council regarding Article Three will not only affect the terms of reference for restructuring the banks, but will inevitably tip the balance in favor of the final approach that will be adopted in the draft financial gap law, especially in terms of determining the responsibilities for losses and ways to pay them, and by extension determining the amounts and mechanisms for returning deposits, starting with the guaranteed limit of $100,000 for a single depositor, no matter how many accounts he has.
Under the reconsideration of the Monetary and Credit Law, and specifically this controversial article, the role and independence of the Central Bank is highlighted, which is defined by maintaining “the integrity of cash,” “economic and financial stability,” and “the soundness of the conditions of the banking system,” while the Fund’s “team,” according to the description of the financial official, works to grant a higher banking body, established under the law, unilateral powers to take decisions to restructure banks and liquidate defaulters among them, under the pretext of the wrong practices of the former governor and the central board of the Central Bank, and without A clear and reassuring determination of the rights of depositors and shareholders.
It is worth noting that Lebanon is going through the same experience for the second time in light of severe crises and severe financial and monetary collapses that have just concluded their seventh year, as in April 2022, during the era of the previous government headed by Najib Mikati, an initial agreement, at the staff level, was concluded with the International Monetary Fund, but subsequent progress was very limited in the commitment to implement basic reforms, so that the first story ended with the outbreak of war in the fall of 2023, starting from New, with the launch of the new era at the beginning of 2025 and the formation of a new government, and their joint commitment to engage in the comprehensive structural reform process, and to resume negotiations with the Fund.
