Kuwait Petroleum Corporation (KPC) may fund the $16bn Al-Zour New Refinery from bank debt, sources have told MEED.

The size of the loan has not been set, but could be up to $13bn.

KPC has yet to decide whether to create a dedicated special-purpose vehicle for non-recourse finance or project finance, go through a subsidiary, namely Kuwait National Petroleum Company (KNPC), or raise the funds at KPC level.

The decision will depend on the cost of funding, which would be lower for KPC than for a non-recourse loan, and single borrower concentration limits among banks.

KPC did not respond to a request for comment.

The refinery will have a capacity of 615,000 barrels a day. Five engineering, procurement and construction contracts, with a total value of more than $13bn, were signed for the scheme in October 2015.

Seeking syndicated loans represents a new strategy from KPC, which is moving away from funding projects directly from its cash reserves as oil prices remain low. KNPC, which is one of KPC’s most important subsidiaries, has $40bn-worth of schemes planned or under way.

KNPC is in the process of arranging a KD3bn ($10bn) loan for the Clean Fuels Project to upgrade existing refineries in Kuwait.

The Kuwaiti dinar tranche totalled KD1.2bn, from 11 local banks. The international commercial banks and export credit agency tranche has yet to be signed.

KPC is also planning a sizeable loan for a $2.9bn liquefied natural gas (LNG) import terminal and regasification scheme.

The entire Al-Zour refinery complex could cost as much as $25bn if KNPC goes ahead with planned petrochemicals projects as well.