The club captain describes the crunch meeting at Anfield as a "defining game" but believes his side could recover from a loss.
A win for the Premier League-leading Merseysiders would see them open up a seven-point lead over their third-place opponents, although Kompany does not believe that his side would be out of the reckoning should it slip up at Anfield.
He told FourFourTwo: "I think, in our case, we [would still] have some chance. Obviously the winners are favorites — we can be sure of that — but, if we lose, I think we have more chance of getting back in it than they would [if they lost].
"It's a great game for neutrals. The Premier League is such a competitive league now and it's good there are different teams involved. For years it had been the same teams but now it could be Liverpool, it could be City or it could be Chelsea.
"Obviously this game is a defining game and it's great to be involved. It will be difficult but, at the same time, if you do something special you will never forget those moments."
And Kompany was giving nothing away over how he plans to deal with Liverpool's potent strike duo of Daniel Sturridge and Luis Suarez, adding that he relishes being tested in the big games.
When asked about the "SAS," he added: "Let's talk about it after the game. I can only say I love playing in these games — this is what I live for. I want to play against the strongest and the best. I think it gets the best out of me — I'm looking forward to it.
"I love the pressure — it's something that I need. This game has all the ingredients so it's perfect. We'll play against strong strikers, strong players, a strong team. You never have the guarantee you will have a good game or you will win but it is something worth fighting for and I like it that way."