Kuwait weighs $7bn pipeline stake sale

Kuwait Petroleum Corporation has opened preliminary discussions with a broad pool of global investors over the potential sale of a minority stake in its crude oil pipeline assets valued at about $7 billion, according to three people familiar with the matter, signalling a strategic shift that mirrors monetisation drives across the Gulf.

The early-stage talks centre on infrastructure funds and private equity groups with experience in energy midstream assets. Among those that have expressed interest are BlackRock, Brookfield Asset Management, EIG Partners and KKR, the people said. Chinese state-backed investors China Silk Road Fund and China Merchants Capital have also been sounded out, alongside I Squared Capital and Macquarie Infrastructure Partners.

Kuwait Petroleum Corporation, the state-owned parent overseeing the country’s oil and gas interests, has been studying options to unlock capital from its domestic pipeline network while retaining operational control. The assets under consideration include crude transportation infrastructure that connects upstream production facilities to export terminals and refineries, forming a critical part of Kuwait’s hydrocarbon value chain.

The deliberations come as Gulf energy producers pursue asset monetisation strategies to attract foreign capital and diversify funding sources without relinquishing control of strategic resources. Saudi Arabia has raised billions of dollars in recent years through partial stake sales and leasing arrangements tied to pipeline networks under Saudi Aramco, drawing in global infrastructure investors seeking stable, long-term cash flows. Abu Dhabi National Oil Company has executed similar transactions, selling stakes in its oil and gas pipelines to international consortia while retaining majority ownership and operational oversight.

Such deals typically involve carving out pipeline assets into separate vehicles and granting investors rights to tariff-based income streams under long-term agreements. The structures have appealed to pension funds and infrastructure managers looking for predictable returns linked to energy transport volumes rather than direct exposure to commodity price volatility.

For Kuwait, whose economy remains heavily reliant on crude exports, a transaction of this scale would represent one of the most significant infrastructure monetisations undertaken by Kuwait Petroleum Corporation. The country holds about 7 per cent of proven global oil reserves and pumps roughly 2.5 to 2.7 million barrels per day under Opec quotas, with exports accounting for the bulk of government revenue.

Officials in Kuwait have long debated measures to strengthen public finances and advance economic reforms. While the state maintains low debt levels compared with some regional peers, political gridlock between the government and parliament has at times complicated fiscal planning, including efforts to pass debt legislation. Asset sales tied to energy infrastructure offer a way to raise capital without increasing sovereign borrowing or diluting ownership of upstream reserves.

The involvement of global investors such as BlackRock and Brookfield underscores sustained appetite for energy infrastructure despite the energy transition. BlackRock manages trillions of dollars in assets and has expanded its private infrastructure portfolio, targeting transport, utilities and midstream assets. Brookfield Asset Management, through its infrastructure arm, has invested in pipelines and energy transport networks across North America, South America and Asia.

EIG Partners and KKR have also built substantial energy investment platforms. EIG has financed and acquired stakes in midstream and upstream assets globally, while KKR has invested in pipeline operators and renewable energy companies as part of a broader push into infrastructure. Macquarie Infrastructure Partners, part of Macquarie Asset Management, is known for large-scale investments in energy, transport and utilities assets worldwide. I Squared Capital has similarly focused on essential infrastructure in emerging and developed markets.

Chinese participation through China Silk Road Fund and China Merchants Capital would reflect Beijing’s continued interest in energy infrastructure aligned with broader trade and investment corridors. Gulf states have deepened economic ties with China, a major buyer of Middle Eastern crude, through long-term supply agreements and joint ventures in refining and petrochemicals.

Analysts note that midstream infrastructure in the Gulf offers several advantages for investors. Production costs in Kuwait are among the lowest globally, supporting resilient export volumes. Long-term government backing reduces counterparty risk, while tariffs can be structured to provide fixed or inflation-linked returns. However, any transaction would need to balance investor expectations with domestic sensitivities over foreign participation in strategic assets.

Valuation remains a central question. A $7 billion price tag would depend on projected throughput volumes, tariff structures and the duration of any concession or lease arrangement. Comparable transactions in Saudi Arabia and Abu Dhabi have attracted competitive bidding, driving up valuations and compressing yields for investors.

Market conditions will also influence timing. Global interest rates, appetite for emerging market infrastructure and oil demand forecasts all shape investor sentiment. Although the energy transition is accelerating in Europe and parts of Asia, oil continues to play a dominant role in global energy consumption, particularly in transport and petrochemicals.