JPMorgan, together with National Bank of Kuwait and Kuwait Finance House, has joined HSBC in arranging a $6 billion financing package for potential purchasers of a stake in Kuwait Petroleum Corporation’s (KPC) crude oil pipeline system, three people with knowledge of the matter told sources close to the transaction.
The pipeline stake on offer has been valued by KPC at around $7 billion. The proposed loan that would back the deal carries a 20-year tenure and an indicative pricing level of 170 basis points over the Secured Overnight Financing Rate (SOFR), according to the people familiar with the matter. The banks involved declined to comment on the arrangement.
Sources described the pricing as competitive given current regional market conditions. HSBC had taken a lead underwriting role on the transaction, and JPMorgan is also advising KPC on the sale process, the people said. KPC, NBK and KFH did not provide comment when approached.
Timeline and conflict-related delays
The divestment process for the pipeline stake was initiated shortly before joint U.S.-Israeli strikes on Iran on February 28 and the subsequent Iranian strikes directed at Israel, U.S. bases and Gulf states. In the weeks that followed, KPC reported that some of its operating units had suffered "severe material damage" in drone attacks, though the company did not identify the specific units affected.
As hostilities evolved, the deadline for preliminary bids was extended to April 28 from an earlier date of April 7, after potential investors requested more time to assess risks tied to the fast-moving conflict, two of the three sources said. A ceasefire between the United States and Iran was announced on April 8.
Investor concerns and government measures
Investors engaged in the sale process are seeking guarantees to cover the risk of volume disruptions that could arise within Kuwait’s pipeline network or in transit through the Strait of Hormuz, one of the sources said. Those concerns reflect exposure to interruptions in the movement of crude and refined products that the pipeline system carries across Kuwait to Gulf export terminals.
In response to the conflict and the potential stress on local credit markets, Kuwait’s central bank eased several regulatory requirements on domestic lenders. Measures included loosening liquidity standards such as the coverage ratio and the net stable funding ratio, and raising lending limits, actions described by sources as efforts to keep credit available and support economic stability.
Sector context
The KPC transaction follows a string of similar pipeline financings by Gulf national oil companies, including moves by Saudi Aramco, Abu Dhabi National Oil Company and Bahrain’s Bapco Energies. KPC’s pipeline network transports crude oil and refined products within Kuwait and to export points on the Arabian Gulf, making it a strategic asset for both domestic flows and international shipments.
While the financing package moves forward with major regional lenders participating, the precise structure of any guarantees requested by investors and further details on which KPC units suffered damage remain unspecified by sources and by KPC.
As long-term financing terms have been proposed and underwriting roles assigned, market participants will continue to watch whether the extended bid timetable and regional security developments prompt further adjustments to the process or to required risk mitigation measures.