Kuwait Petroleum Corporation (KPC) has entered into a $16 billion infrastructure partnership involving its crude oil pipeline network, marking what the state-owned energy company describes as the country’s largest foreign direct investment to date.
The agreement brings together a consortium led by Blackstone, KKR and Brookfield under a lease-and-leaseback structure that will govern the operation of the pipeline system over the next 20 years.
As part of the arrangement, Kuwait Oil Company (KOC), a subsidiary of KPC, will establish a joint venture with the investor group. KOC will retain a 51 per cent controlling stake, while the consortium will collectively own the remaining 49 per cent, divided equally among the three firms.
The joint venture will be responsible for operating and maintaining the crude oil pipeline assets, with the consortium receiving payments based on pipeline usage.
KPC said the transaction is expected to provide KOC with about $7.9 billion in upfront proceeds, funds that will support the company’s long-term investment programme, including efforts to increase Kuwait’s crude oil production capacity to four million barrels per day by 2035.
KPC Chief Executive Officer Sheikh Nawaf Al-Sabah said the investment demonstrates continued international confidence in Kuwait despite heightened geopolitical tensions in the region.
According to the company, the deal is one of the first major foreign investments announced in the Gulf since the outbreak of the Iran conflict earlier this year. The transaction, however, remains subject to regulatory approvals.
The agreement comes as Kuwait continues to recover from disruptions to its oil sector caused by the regional conflict. Recent assessments indicated that the country’s crude production could decline significantly following renewed disruptions around the Strait of Hormuz.
Two major refineries, Mina Al-Ahmadi and Mina Abdullah, also sustained extensive damage during the conflict, with repairs expected to take several years.
Earlier this year, Al-Sabah expressed confidence that oil production could return to full capacity within three to four months after the end of the conflict.
Meanwhile, global oil prices fell by about five per cent in early trading on Monday after the United States and Iran suspended hostilities over the weekend, raising hopes of easing tensions and renewed diplomatic engagement.
