Kuwait's state-owned Kuwait Petroleum Corporation (KPC) and its subsidiary Kuwait Oil Company (KOC) have entered into a significant $16 billion lease and leaseback agreement for their crude oil pipeline network. The deal, known as "Project Peregrine," involves a consortium of global investment funds: Blackstone, Brookfield, and KKR. This transaction represents the largest foreign direct investment in Kuwait's history, highlighting the country's efforts to attract global capital.
Under the terms of the agreement, KOC will establish a joint venture with the three global investors. KOC will maintain a 51% majority stake in this joint venture, while Blackstone, Brookfield, and KKR will collectively hold the remaining 49%. The joint venture will lease the usage rights to the entire network of 13 pipelines, spanning approximately 320 kilometers. KOC will then lease back the exclusive use, operational, and maintenance rights for a period of 20.5 years, based on a volume-based tariff. KOC will retain full ownership and operational control of the pipeline network, and the deal does not impose limits on Kuwait's refining throughput or production volumes, which remain sovereign policy decisions.
This deal is expected to generate approximately $7.85 billion in upfront proceeds for KPC. These funds are slated to support KPC's capital expenditure plans, including its strategic goal to increase crude oil production capacity to 4 million barrels per day by 2035. The transaction aligns with a broader trend among Gulf state oil companies and sovereign investors to monetize infrastructure assets and attract foreign investment to finance domestic development initiatives.
The agreement follows similar pipeline fundraisings by other major regional oil entities such as Saudi Arabia’s Aramco, Abu Dhabi National Oil Company, and Bahrain’s Bapco Energies. The deal comes amidst ongoing regional tensions, including recent reports of attacks on infrastructure in Kuwait. Financial advisors to KPC for this transaction included Centerview Partners, HSBC, and JP Morgan. The stable, well-financed export infrastructure resulting from this deal could also be viewed positively by major crude importers like India, which has been diversifying its crude suppliers.
