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Pipeline leasing scheme could boost Kuwait project activity

24 September 2025

 

The oil pipeline leasing scheme currently being evaluated by Kuwait’s national oil and gas company could boost project activity in the country’s energy sector, industry sources say.

Earlier this month, KPC chief executive Sheikh Nawaf Saud Nasir Al‑Sabah said his organisation was “studying the possibility” of a leasing deal similar to ones completed in the UAE, Saudi Arabia and Bahrain.

Commenting on the possibility of a deal to obtain upfront cash in return for tariff payments for leasing the country’s pipelines, he said he would welcome the “opportunity to secure additional financing through these assets”.

There is potential for billions of dollars of upfront cash to be unlocked by a leasing scheme, which could revive some KPC projects delayed for financial reasons.

A similar ‘lease‑and‑leaseback’ deal that Saudi Aramco signed in August for gas‑processing facilities at its Jafurah unconventional gas reserve was worth $11bn.

Aramco signed the deal with a consortium led by funds managed by Global Infrastructure Partners (GIP), part of US asset manager BlackRock.

Potential beneficiaries

Commenting on which Kuwaiti projects might advance more rapidly if a pipeline deal is agreed, one source said: “It’s not yet clear exactly which projects might see faster progress if a deal goes through – but KPC has signalled that some of the funds would be used to boost projects in the country’s chemical sector.”

One project industry insiders expect could benefit is the planned Al‑Zour integrated complex upgrade programme (Zicup), estimated at $10bn.

Earlier this month, MEED revealed that Kuwait is considering relaunching prequalification for the project, which is also known as the Al-Zour petrochemicals project, or the Petrochemical Refinery Integration Al-Zour Project (Prize).

The project is being developed by state-owned Kuwait Integrated Petroleum Industries Company (Kipic) and is expected to be integrated with the $16bn Al-Zour refinery.

One source said: “After stalling for years, this chemicals complex is now starting to be discussed more by Kipic and prequalification could be launched early next year.

“It may be a coincidence that this project has started to regain momentum at the same time as this pipeline deal is being discussed, but it certainly makes sense to use the pipeline deal to push the chemicals project forward.”

In Kipic’s latest annual report, published in August, the company said it was “actively pursuing the necessary approvals for the project’s capital budget allocation”.

The company said that all project studies had been presented to KPC’s Higher Steering Committee to develop solutions for challenges related to obtaining the final investment decision.

It added: “Kipic aims to secure Higher Steering Committee approval for the Petrochemical Complex Project (PRIZe) and proceed with capital budget (FID) approval from relevant authorities.”

Financing context

Financing has been a key sticking point for the chemicals project.

In June 2024, MEED reported that Kipic was seeking a financing package similar to Kuwait’s Clean Fuels Project, which upgraded and integrated two of the country’s largest refineries.

The $14.5bn Clean Fuels Project was financed primarily through a $6.25bn international syndicated loan signed in May 2017, backed by seven export credit agencies (ECAs) and 11 commercial banks.

Since 2017, many ECAs have become more reluctant to support fossil‑fuel projects, making similar financing harder to secure for the Al‑Zour chemicals complex.

Raising money through a pipeline leasing deal could be a key way to fund a large part of the project.

Deal prospects

Whether Kuwait proceeds with a “lease‑and‑leaseback” deal focused on key pipeline infrastructure remains to be seen, but many industry insiders think a deal is likely.

One source said: “Kuwait is a cautious country that isn’t exactly known for its financial innovation. But it is a type of deal that has been demonstrated in several other countries in the region.

“Now that officials have seen how it can be done and what the potential benefits are, it’s likely that they will follow suit in order to free up money that will be put into strategic projects.”

Before the August GIP deal, Aramco completed a similar $12.4bn pipeline transaction with EIG Global Energy Partners in 2021. In the same year, it also did a $15.5bn deal for gas pipelines with BlackRock Real Assets and Hassana, an arm of Saudi Arabia’s Public Investment Fund (PIF).

In the UAE, Adnoc has completed several lease‑leaseback deals to raise upfront cash.

In 2020, Adnoc leased rights to 38 gas pipelines, valued at $20.7bn, to a newly formed subsidiary, Adnoc Gas Pipelines, for 20 years. A consortium of international investors acquired a 49% stake in that subsidiary; Adnoc retained 51%.

The year before, Adnoc leased rights to its oil‑pipeline network, with investors taking a 49% stake in the newly created Adnoc Oil Pipelines.

If Kuwait follows suit and makes similar deals to Adnoc and Aramco, it could resolve financing issues for key projects and enable KPC to issue tenders for large projects that contractors have been awaiting.

MEED’s September 2025 report on Kuwait includes:

> COMMENT: Kuwait’s political hiatus brings opportunity
> GOVERNMENT: Kuwait looks to capitalise on consolidation of power
> ECONOMY: Kuwait aims for investment to revive economy
> BANKING: Change is coming for Kuwait’s banks
> OIL & GAS: Kuwaiti oil activity rising after parliament suspension
> POWER & WATER: Signs of project progress for Kuwait's power and water sector
> CONSTRUCTION: Momentum builds in Kuwait construction
> DATABANK: Kuwait’s growth picture improves

To see previous issues of MEED Business Review, please click here
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Wil Crisp

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