Kuwait seals $16bn pipeline JV deal

Kuwait Oil Company (KOC), a unit of Kuwait Petroleum Corporation, has signed a US$16.0 billion lease-and-leaseback agreement covering its crude oil pipeline network with a consortium comprising Blackstone (BX), Brookfield and KKR. The transaction, referred to as Project Peregrine, is centred on monetising usage rights to key midstream infrastructure while maintaining state ownership of the underlying assets.

Under the structure, a newly formed Kuwaiti-incorporated joint venture will obtain lease rights to the pipeline network. In turn, the joint venture will grant back exclusive use, operations and maintenance of the assets to KOC under the same lease-and-leaseback arrangement, ensuring continuity of day-to-day operations by the state oil company.

The joint venture is designed with a 20.5-year term and includes a volume-based tariff payable for pipeline usage. This tariff mechanism links payments to the actual throughput on the network over the life of the agreement.

KOC will retain a 51% equity stake in the joint venture, preserving majority ownership in the new structure. Despite the transfer of lease rights to the joint venture, KOC will keep full ownership of the pipeline assets themselves and will continue to hold operational control over the network.

The investor consortium will collectively hold a 49% stake in the joint venture. Disclosures state that Blackstone (BX), Brookfield and KKR will each hold an equal one‑third share of this 49% interest, aligning the three global investors on the same economic terms within the structure.

The agreement covers a crude oil pipeline network consisting of 13 pipelines with a total length of approximately 320 kilometres. These pipelines form a significant part of the country’s midstream infrastructure, connecting production and export or processing points across Kuwait.

At closing, KOC is expected to receive about US$7.85 billion in upfront proceeds from the transaction. These proceeds are intended to support the state oil company’s capital expenditure plans, providing funding capacity for ongoing and future investment needs.

Kuwaiti authorities have described Project Peregrine as the largest foreign direct investment in the country’s history. The participation of Blackstone (BX), Brookfield and KKR in a long-term, tariff-based arrangement underscores international investor interest in Kuwait’s energy infrastructure assets.