By Hadeel Al Sayegh
Feb 24 (Reuters) – National oil company Kuwait Petroleum Corporation (KPC) has held early stage talks with a large group of potential investors over a $7 billion stake sale in its crude oil pipelines, three sources familiar with the matter said, following similar moves by Gulf peers Saudi Arabia and the United Arab Emirates.
BlackRock, Brookfield Asset Management, EIG Partners and buyout group KKR are among those that have shown interest, the sources said. Also showing interest are Chinese state enterprises China Silk Road Fund and China Merchants Capital, along with I Squared Capital and Macquarie Infrastructure Partners, the sources said.
The transaction is structured with around $1.5 billion in equity and the remainder financed through debt, the three sources said.
Sheikh Nawaf Saud Al-Sabah, KPC’s deputy chairman and chief executive, is leading a steering committee overseeing the process, which sources described as being managed with close, hands-on oversight, with the committee convening every few weeks to monitor progress.
“We are studying the possibility of leasing and re-leasing (oil) pipelines in the country,” Al-Sabah told reporters in September. “The pipelines are assets owned by KPC and do not generate direct financial returns. If there is an opportunity to secure additional financing through these assets… then welcome,” he added.
BlackRock, Brookfield, Macquarie, KKR, EIG, I Squared declined to comment. KPC, China Silk Road Fund and China Merchants Capital did not respond to requests for comment.
KPC is now approaching other banks to join HSBC in underwriting the debt portion of the deal, two of the sources said.
Two of the sources said that the process to formally launch the oil pipeline network stake sale could start as soon as the end of this month, as Reuters reported last month.
The concession, said to span 25 years according to the sources, faces a testing backdrop. Crude oil hovering around $71 per barrel is weighing on projected volumes and returns, with geopolitical tensions in the Gulf region presenting an additional layer of complexity, one of the sources said.
The move echoes deals in recent years by Saudi Aramco, Abu Dhabi National Oil Company and Bahrain’s Bapco Energies to raise funds from their pipeline infrastructure networks. Such deals provide upfront cash in return for tariff payments over time.
Kuwait Petroleum Corp in late 2023 said it will spend $410 billion through 2040 on a strategy, that aims to boost production capacity to 4 million barrels per day.
BlackRock, which last year signed a similar deal for Aramco’s Jafurah gas project processing facilities in Saudi Arabia, will open an office in Kuwait and has appointed Ali AlQadhi to lead operations in the country, Kuwait’s state news agency said in September.
(Reporting by Hadeel Al Sayegh; Additional reporting by Yousef Saba; Editing by Susan Fenton)
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