Kuwait National Petroleum Company (KNPC) expects to close the first phase of funding for its multi-billion-dollar Clean Fuels Project with local banks as early as the first week of April, the state oil refiner told Kuwait News Agency.

Part of the country's KD30-billion ($100 billion) economic development plan, the Clean Fuels Project will upgrade and expand two of the Gulf Arab state's largest existing refineries with a focus on producing higher-value products such as diesel and kerosene for export.

KNPC was in advanced talks with local conventional and Islamic banks to secure a KD900 million  loan of 10 years duration, chief executive Mohammed al-Mutairi was quoted as saying in a statement to the state news agency.

National Bank of Kuwait and Kuwait Finance House were helping to arrange this part of the funding, the statement said.

Negotiations were also under way to secure further financing from international banks which would be guaranteed by the export credit agencies of South Korea, Japan, Britain, Italy and the Netherlands.

No figure for this portion was given, but the statement said the expected completion of talks was scheduled later this year.

Sources told Reuters in April 2015 that KNPC was in talks with banks to raise as much as $10 billion for a period between seven and 10 years to fund around 70 percent of the total project cost.

Under the project, the capacity of the Mina Al Ahmadi refinery will drop to 347,000 barrels per day (bpd) from 466,000, while Mina Abdulla refinery's capacity will rise to 454,000 bpd from 270,000.

The reduction in the capacity of the Ahmadi refinery, after shutting one of its crude distillation units, will be compensated for by adding new units to produce higher-value products. – Reuters