Kuwait Petroleum Corporation (KPC) has signed a lease-and-lease-back agreement worth $16 billion related to the company’s oil pipeline network. The purpose of the deal is to attract capital for the long-term expansion of oil production.

According to the published statement, KPC’s subsidiary, Kuwait Oil Company (KOC), which manages a 320-kilometer pipeline network in Kuwait, has entered into an agreement with a consortium of international investors that includes Blackstone, Brookfield, and KKR.

The plan involves creating a joint venture in which KOC will hold a 51% stake, while the consortium will own the remaining 49%. The new company, registered in Kuwait, will receive rights to operate 13 of the country’s oil pipelines. Subsequently, it will grant KOC exclusive rights to operate and maintain these assets for 20.5 years in exchange for a tariff based on throughput volumes.

KOC will retain full ownership and operational control over the pipeline network. The joint venture will not impose any restrictions on oil processing or production volumes in Kuwait; all such decisions will remain under government authority.

Upon completion of the transaction, KOC and KPC will receive advance payments totaling $7.85 billion, which will be used to finance the company’s investment plans, including reaching a production capacity of 4 million barrels of oil per day by 2035.

Currently, Kuwait’s OPEC oil production quota is about 2.63 million barrels per day, but in recent months output has been significantly reduced due to the closure of the Strait of Hormuz amid conflict in the Middle East. Production capacity at operating fields is estimated to range from 2.8 to 2.9 million barrels per day.

The lease-and-lease-back agreement will be governed by Kuwaiti law and is subject to standard closing conditions and regulatory approvals. The timeline for closing the deal has not been specified.

This transaction is one of the first major foreign investments in the Persian Gulf region following recent regional tensions. Similar pipeline agreements in the region were concluded between 2019 and 2021: in June 2019, the UAE’s national oil company Abu Dhabi National Oil Company (Adnoc) signed a 23-year pipeline agreement; in April 2021, Saudi Aramco entered into a 25-year pipeline deal; and in December 2021, a 20-year gas pipeline agreement was signed.

The deal involving international investors is seen as a testament to Kuwait’s stability, the quality of KPC’s assets, and the country’s long-term vision for energy sector development. The agreement also demonstrates Kuwait’s continued appeal to global capital, even amid a challenging regional environment.