Oil: $16 billion mega-deal between Kuwait and the private equity giants
Blackstone, Brookfield and KKR to acquire 49 per cent of Kuwait’s gas pipeline network: the funds will be used for new investments to expand production
Kuwait’s state-owned oil company has announced that it has signed a $16 billion agreement to build gas pipeline infrastructure with the international private equity giants Blackstone, KKR and Brookfield.
The Hormuz Effect
The investment comes at a time when the hydrocarbon-rich Gulf states are rushing to increase production in the wake of the Iranian attacks and the closure of the Strait of Hormuz, a vital waterway for energy exports.
The Kuwait Petroleum Corporation (KPC) has stated that its oil subsidiary has signed a lease agreement with a buy-back option covering ‘the entire gas pipeline network, for both the domestic market and for export’, with the international consortium.
The largest foreign investment in the country
Under the agreement, which will run for over twenty years, the consortium led by New York-based Blackstone, Canada’s Brookfield and US investors KKR will acquire a 49 per cent stake in Kuwait’s 320-kilometre gas pipeline network, whilst the Kuwaiti company will retain 51 per cent. The joint venture “represents the largest foreign direct investment in Kuwait’s history and a milestone for our country’s economic development,” said Nawaf Saud Al-Sabah, chief executive of the Kuwait Petroleum Corporation (KPC).
The economic impact
The agreement is expected to generate initial revenues of $7.85 billion for the Kuwait Oil Company (KOC), which aims to expand its crude oil production capacity to four million barrels a day by 2035.
