State-owned energy entity Kuwait Petroleum Corporation (KPC) is expected to close an agreement with lenders to raise a loan of up to KD1bn ($3.29bn) in the first quarter of 2019.

Sources tell MEED that KPC has been looking to raise the money from loans as part of a strategic move to fund its large-scale projects through debt financing, rather than by tapping into its own capital reserves.

Apart from international lenders, KPC is said to be particularly considering local Kuwaiti lenders for raising the loan, the sources said.

Among the local banks that offer credit to Kuwait’s oil and gas stakeholders, National Bank of Kuwait, Gulf Bank, Boubyan Bank and Commercial Bank of Kuwait are in contention to seal the credit facility with KPC.

“It is unlikely that KPC will reach a [loan] deal with banks this year, as banks are in the process of closing their order books," one source said. "So, it will most likely be in the first quarter of next year.”

KPC intends to use the money raised for a project belonging to its subsidiary Kuwait Oil Company (KOC) to increase oil and gas production from its Jurassic upstream development in northern Kuwait.

One of KPC's 2030 goals is to raise the Opec member’s oil output to 4 million barrels a day by 2020.

Another KPC subsidiary, Kuwait Integrated Petrochemical Industries Company (Kipic), was also reportedly looking to borrow up to $2.6bn from banks and export credit agencies to build a liquefied natural gas (LNG) import terminal.