Kuwait Petroleum Corp. (KPC), the national oil company of Kuwait, announced it has finalized a $15.5 billion lease and leaseback agreement for its oil pipeline network with a consortium of international investment firms. The deal, confirmed in early December 2021, involves Blackstone Infrastructure Partners, which led the group, alongside KKR and Brookfield Asset Management.
Under the terms of the agreement, the consortium acquired a 49% stake in a newly created entity, Kuwait Infrastructure Company (KIC). KPC’s subsidiary, Kuwait Oil Company (KOC), retains the majority 51% share in KIC.
The transaction gives KIC the rights to receive tariff payments for the use of the pipeline network for a 20-year period. In exchange, KPC received an upfront payment of $15.5 billion. KOC will remain the sole operator of the pipeline network and will retain full ownership and operational control of the physical assets. The agreement is a financial transaction structured to provide capital to KPC while it continues to manage its core infrastructure.
The pipeline system in question is a network responsible for transporting crude oil and liquified petroleum gas from production centers to downstream facilities across Kuwait.
In a statement released at the time of the agreement, Kuwait’s then-Minister of Oil, Mohammed Al-Fares, described the transaction as part of the country’s strategy to optimize its assets and attract foreign investment.
Representatives from the investment firms also commented on the deal. Sean Klimczak, Global Head of Infrastructure at Blackstone, stated, “We are proud to partner with KPC on this landmark transaction. This investment underscores our confidence in KPC as a world-class operator and in Kuwait as a stable and attractive investment destination.”
The agreement follows a pattern of similar infrastructure financing deals completed by other state-owned energy producers in the Middle East. Such arrangements allow national oil companies to raise significant funds from their extensive infrastructure assets without relinquishing control or ownership of the underlying operations.
