Kuwait Petroleum Corp. (KPC) is in early-stage negotiations with a global consortium of investors to sell a stake in its crude oil pipelines, a deal valued at approximately $7 billion, according to three sources familiar with the matter.

The state-owned oil giant is following a blueprint established by regional neighbours Saudi Arabia and the United Arab Emirates, seeking to unlock value from midstream infrastructure. 

The proposed transaction is structured with $1.5 billion in equity, while the remaining $5.5 billion will be financed through debt. 

According to three sources privy to the matter, several heavyweights in the private equity and infrastructure sectors have expressed interest, including BlackRock, Brookfield Asset Management, EIG Partners, and KKR.

Interest has also emerged from Asian state enterprises, specifically the China Silk Road Fund and China Merchants Capital, alongside I Squared Capital and Macquarie Infrastructure Partners.

Sheikh Nawaf Saud Al-Sabah, KPC’s deputy chairman and chief executive, is personally leading a steering committee to oversee the process. The committee reportedly meets every few weeks to maintain "hands-on oversight" of the deal’s progression.

"We are studying the possibility of leasing and re-leasing pipelines in the country," Al-Sabah told reporters recently, noting that while the assets are essential, they do not currently generate direct financial returns.

The 25-year concession comes during a volatile period for energy markets. With crude oil prices hovering around $71 per barrel, sources suggest that projected volumes and returns are under pressure. 

Furthermore, heightened geopolitical tensions in the Gulf have added a layer of complexity to the negotiations.

Despite these challenges, KPC is moving forward with financing. Two sources told Reuters that KPC is currently approaching banks to join HSBC in underwriting the debt portion of the deal, with a formal launch of the stake sale expected to occur as early as the end of this month.

The capital raised will likely support KPC’s ambitious $410 billion long-term strategy, which aims to boost production capacity to 4 million barrels per day by 2040.

KPC’s move comes at a time when the country is focusing on expanding its crude oil pipeline network. 

Earlier this week, Kuwait’s Central Agency for Public Tenders approved four major pipeline contracts totalling 447.31 million Kuwaiti dinars (about $1.5 billion). The projects will be undertaken by four different engineering and construction companies across four different regions.