Texas company buys Bahamas oil storage asset

Buckeye Partners LP said Monday it agreed to buy an 80 per cent stake in the Caribbean's largest oil and petroleum products storage terminal, Bahamas Oil Refining Company International, for US$1.36 billion from First Reserve Corp.

Bahamas Oil, or BORCO, is also the fourth-largest oil and petroleum products storage terminal in the world, with current storage capacity of 21.6 million barrels.

Houston-based Buckeye, which owns and operates oil pipeline systems, expects to finance the purchase through a combination of stock and debt.

First Reserve will get about 6.9 million Buckeye partnership units worth about US$400 million, and proceeds from Buck-eye's sale of US$425 million worth of units to institutional investors.

Buckeye also obtained up to US$775 million in financing to fund the rest of the acquisition, but said it plans to raise cash through issuing debt prior to closing the acquisition, rather than use the bridge financing.

Royal Vopak, based in The Netherlands, owns the remaining 20 per cent of BORCO.

Buckeye said it plans to spend US$400 million over the next two to three years to expand BORCO, adding about 7.5 million barrels of flexible petroleum product storage and increasing total storage capacity to more than 29 million barrels.

Buckeye owns and operates about 5,400 miles of pipeline in the US, 69 refined petroleum products terminals, operates about 2,400 miles of pipeline under agreements with major oil and chemical companies, and owns a natural gas storage faci-lity in northern California.

- AP