Kuwait Petroleum Corporation (KPC) said on July 25 that its subsidiary Kuwait Oil Company (KOC) has signed a $16bn lease-and-leaseback agreement covering its entire crude oil pipeline network with a consortium of Blackstone, Brookfield and KKR, in what it called the largest foreign direct investment in Kuwait's history.
Under the deal, dubbed Project Peregrine, a newly formed Kuwaiti joint venture will lease usage rights to all 13 of KOC's pipelines – roughly 320km of network – for a 20.5-year period in exchange for a volume-based tariff. Blackstone, Brookfield and KKR will collectively hold a 49% stake in the JV in three equal shares, while KOC retains 51% and full ownership and operational control of the network, with no restrictions imposed on Kuwait's production or refining volumes.
The transaction is expected to generate $7.85bn in upfront proceeds for KOC, funds KPC said would support its capital spending plans, including a target of 4mn barrels per day of crude production capacity by 2035 under its 2040 Strategy.
"Project Peregrine represents the largest foreign direct investment in Kuwait's history and a defining milestone for our country's economic development," said Sheikh Nawaf Saud Al-Sabah, KPC's deputy chairman and chief executive, adding it fulfils a commitment made by Kuwait's prime minister at the Kuwait Oil & Gas Show in February to attract world-class investors into strategic infrastructure "while preserving full national ownership and operational control."
KKR co-chief executives Joe Bae and Scott Nuttall said the firm had "greatly valued" its partnership with Al-Sabah's team, while Brookfield chief executive Bruce Flatt said the firm was "proud to support Kuwait as it continues to build out its vital energy infrastructure." Blackstone chairman and chief executive Stephen Schwarzman called the deal part of the firm's "nearly four-decade partnership with Kuwait." Centerview Partners, HSBC and J.P. Morgan advised KPC on the transaction, which is subject to customary closing conditions and regulatory approval.
The scale of the commitment is notable given the regional backdrop: Kuwait has come under daily attack from Iran as the wider US-Israel-Iran war continues, oil and gas analyst Giovanni Staunovo noted, with the deal signed even as the Gulf state hosts US forces that have been targeted repeatedly by Iranian drone and missile strikes. KPC called the agreement, among the first major inward investments in the Gulf since the latest round of regional tensions began, testament to "Kuwait's resilience and agility" and to continued investor confidence in the country despite the conflict raging around it.
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