Kuwait Petroleum Corporation has signed a $16 billion lease and leaseback deal covering its crude oil pipeline network with Blackstone, KKR and Brookfield. Named Project Peregrine, the transaction is the largest foreign direct investment in Kuwait's history and is expected to generate $7.85 billion in upfront proceeds at closing.
Kuwait Petroleum Corporation has handed a US consortium a stake in its crude oil pipeline network through a $16 billion lease and leaseback agreement with Blackstone, KKR and Brookfield. The state-owned company called the deal, named Project Peregrine, the largest foreign direct investment in Kuwait's history.
How the deal is structured
Under the agreement, KPC subsidiary Kuwait Oil Company is forming a joint venture with the three US investment groups for 20.5 years. The three managers will collectively own a 49% interest, leaving Kuwait Oil Company with a controlling 51% stake.
The transaction is expected to generate $7.85 billion in upfront proceeds when it closes, with payments to the venture based on the volume of crude oil moved through the network. Kuwait Oil Company keeps full ownership and operational control of the infrastructure, which comprises 13 pipelines extending about 320 kilometres, or 199 miles. The leaseback structure lets KPC unlock capital tied to the network without selling the asset or handing over its operation.
Why the Gulf is monetising infrastructure
For the investors, the deal offers exposure to long-term, tariff-based revenue linked to oil transportation volumes rather than direct movements in crude prices. Private-equity and infrastructure managers have been drawn to such agreements by their long contract periods and predictable cash flows.
The transaction follows similar infrastructure monetisation deals across the Gulf. National energy companies have increasingly raised capital from pipelines and other mature assets to finance new production capacity and domestic investment programmes.
Kuwait's stake in oil
Kuwait controls about 6% of the world's proven oil reserves and relies heavily on crude exports for government revenue. The country has sought to expand production capacity and attract more international investment into its energy industry. Project Peregrine gives KPC immediate funding while handing the three managers access to a network serving one of OPEC's largest oil producers.
Source: Investing.com
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