Investing.com — Kuwait Petroleum Corporation has signed a $16 billion lease and leaseback agreement covering its crude oil pipeline network with Blackstone, KKR and Brookfield, Reuters reported.

The state-owned company described the transaction, named Project Peregrine, as the largest foreign direct investment in Kuwait’s history.

Under the agreement, KPC subsidiary Kuwait Oil Company will establish a joint venture with the three U.S. investment groups for 20.5 years.

Blackstone, KKR and Brookfield will collectively own a 49% interest in the venture, leaving Kuwait Oil Company with a controlling 51% stake.

The transaction is expected to generate $7.85 billion in upfront proceeds when it closes. Payments to the venture will be based on the volume of crude oil transported through the network.

Kuwait Oil Company will retain full ownership and operational control of the infrastructure, which comprises 13 pipelines extending about 320 kilometres, or 199 miles.

The leaseback structure allows KPC to unlock capital tied to established infrastructure without selling the strategic asset or transferring responsibility for its operations.

For the investment consortium, the agreement offers exposure to long-term, tariff-based revenue linked to oil transportation volumes rather than direct movements in crude prices.

The transaction follows similar infrastructure monetisation deals across the Gulf. National energy companies have increasingly raised capital from pipelines, processing facilities and other mature assets to finance new production capacity and domestic investment programmes.

Private-equity and infrastructure managers have been attracted to these agreements by their long contract periods, predictable cash flows and links to state-backed energy producers.

Kuwait controls about 6% of the world’s proven oil reserves and relies heavily on crude exports for government revenue. The country has sought to expand production capacity and attract more international investment into its energy industry.

Project Peregrine gives KPC a substantial source of immediate funding while preserving majority ownership of the network. The three asset managers gain access to an infrastructure system serving one of the largest oil-producing members of OPEC.

https://finance.yahoo.com/energy/articles/kuwait-signs-16-billion-oil-071157032.html