Kuwait Petroleum Corporation, the state-owned corporation overseeing Kuwait's oil and gas sector, today (July 25) announced that its wholly owned subsidiary, Kuwait Oil Company (KOC) has signed a $16 billion lease-and-lease-back agreement involving its entire domestic and export pipeline network with a consortium of international infrastructure and institutional investors led collectively by Blackstone, Brookfield and KKR.
KOC, a key entity responsible for the exploration, production and transportation of crude oil in Kuwait, said as part of the transaction, a newly formed Kuwaiti-incorporated JV will lease from the company the usage rights to all of its 13 pipelines, spanning 320km of Kuwait’s pipeline network.
Under the terms of the agreement, the JV will grant back to KOC the exclusive use, operational and maintenance rights in the pipeline assets for a 20.5 year period, in exchange for a volume-based tariff.
KOC said the deal will also pave the way for the consortium, comprising Blackstone, Brookfield and KKR, to stablish a new joint venture, with KOC holding a 51% majority stake and the consortium collectively holding the remaining 49%, with equal stakes and on equal terms.
KOC will continue to maintain full ownership and operational control of the pipeline network. The JV will not impose any restrictions on Kuwait's refining throughput or production volumes, all of which remain subject to decisions made by the State of Kuwait.
The JV is expected to generate upfront proceeds of $7.85 billion for KOC upon closing, supporting KPC’s capital expenditure plans, including KPC’s target of 4 million barrels per day of crude oil production capacity by 2035, and supporting Kuwait's broader efforts to diversify sources of capital and deepen engagement with global investors.
The Kuwaiti oil major said the agreement ranks among the first major inward investments in the Arabian Gulf region since the onset of recent tensions, and it bears testament to Kuwait's resilience and agility, and the sustained confidence of global institutional investors in Kuwait and KPC.
Beyond its immediate proceeds, the JV is intended to serve as a catalyst for deeper participation by global investors in the national economy, in keeping with KPC's development plan and Kuwait's long-term diversification agenda.
Shaikh Nawaf Saud Al-Sabah, Deputy Chairman and CEO of KPC, said the Project Peregrine represents the largest FDI in Kuwait's history and a defining milestone for the country's economic development.
Welcoming the consortium backing, Al Sabah said: “Their investment reflects confidence in Kuwait's resilience, the quality of KPC's assets and our long-term vision for the country's energy sector.
“This transaction sends a powerful signal that Kuwait continues to rise as an attractive destination for global capital, even amid a challenging regional environment,” he stated.
Joe Bae and Scott Nuttall, Co-CEOs of KKR, said: “Kuwait has established itself as one of the world's leading energy producers through decades of disciplined investment and prudent stewardship. We have greatly valued our partnership with Shaikh Nawaf and his team.”
“This investment reflects our confidence in Kuwait and our commitment to providing long-term capital in support of strategic infrastructure, and we look forward to deepening our partnership and identifying further opportunities to invest alongside Kuwait in the years ahead,” he stated.
Bruce Flatt, CEO of Brookfield Corporation, said: “Kuwait is a long-standing and highly valued partner of Brookfield’s, and we have long admired the way it has built a globally leading energy industry. We are proud to support Kuwait as it continues to build out its vital energy infrastructure, and honored to invest alongside our partners for the long term.”
Stephen Schwarzman, Chairman, CEO and Co-founder of Blackstone, said: “Kuwait’s leadership, vision and resources have made it a compelling destination for international capital, built on its strength in the energy sector and remarkable efforts to diversify its economy.”
“We are proud to support this critical infrastructure, helping meet rising global energy demand while deepening Blackstone’s nearly four-decade partnership with Kuwait,” he added.-TradeArabia News Service