Kuwait Petroleum Corporation (KPC) has signed a $16 billion deal to lease and lease back its crude oil pipeline network with a consortium comprising global funds Blackstone, Brookfield and KKR, the state-owned Gulf firm said on Saturday.
It said it was the largest foreign direct investment in the country’s history.
Under the investment called Project Peregrine, KPC’s unit Kuwait Oil Company (KOC) is establishing a joint venture with the three global investors in a lease and leaseback structure for a 20.5-year period that includes a volume-based tariff, KPC said in a statement.
“This transaction sends a powerful signal that Kuwait continues to rise as an attractive destination for global capital, even amid a challenging regional environment,” KPC Deputy Chairman and CEO Shaikh Nawaf Saud Al-Sabah said in the statement.
The process for the stake sale was launched just before joint U.S.-Israeli strikes on Iran on February 28, Reuters previously reported citing sources.
Iran continues to attack infrastructure in Kuwait and elsewhere in the region after an interim truce between the U.S. and Iran that was meant to end the Iran warcollapsed last month.
Iran said on Friday it had attacked U.S. military equipment depots in northern Kuwait, and the positions of U.S. troops at Camp Arifjan and at Camp Doha, near Kuwait City.
COMMON STRUCTURE The KPC deal is part of a broader push by Gulf state oil companies and sovereign investors to raise funds from infrastructure assets and attract foreign capital, as they look to fund domestic investment plans.
It follows pipeline fundraisings by Saudi Arabia’s Aramco, Abu Dhabi National Oil Company and Bahrain’s Bapco Energies.
Blackstone, Brookfield and KKR will collectively hold a 49% stake in the joint venture, while KOC will retain a 51% stake as well as full ownership and operational control of the network, which comprises 13 pipelines spanning a total of around 320 kilometres (199 miles).
The transaction is expected to generate $7.85 billion in upfront proceeds at closing, KPC said, adding it will support the oil company’s capital expenditure plans.
KPC’s pipeline network transports crude oil and refined products across Kuwait, linking the country’s oilfields to export terminals on the Arabian Gulf.
Centerview Partners, HSBC and JP Morgan acted as financial advisors to KPC.
(Reporting by Federico Maccioni, Ahmed Elimam and Eman Abouhassira; Editing by Kim Coghill and Susan Fenton)