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Morgan close to buying BORCO oil terminal -sources
By Edgar Ang
Reuters
NEW YORK
Petroleumworld.com 07 17 07
U.S. investment bank Morgan Stanley (MS.N: Quote, Profile, Research) has emerged as the frontrunner to buy the 20 million-barrel-capacity BORCO oil storage terminal in Freeport, Bahamas, sources close to the seller and industry sources said on Monday.Venezuela's state-owned oil company, PDVSA, is expected to receive more than the previous estimate of $700 million for the strategic facility in the Caribbean due to the potential for future expansions and the existing condition of the facility , sources said.
"Nustar Energy LP (NSH.N: Quote, Profile, Research) is a close runner-up to Morgan Stanley in the bidding," a U.S. Gulf Coast trader said.
The move to buy BORCO terminal seems to be in line with Morgan Stanley's move to buff up logistics and transportation to support its physical oil trading business.
Earlier this year, Morgan Stanley took up 50,000 cubic meters of clean oil storage at Oiltanking's facility in Singapore, as the derivatives trader sought to beef up its physical trading business in Asia.
Morgan Stanley is also very active in oil tanker and dry freight sectors, allowing the trader more flexibility in oil trading and physical deliveries.
Some bidders for BORCO are planning to turn the storage facility into a base for physical oil trading due to the strategic location, a second source said.
"Bidders could see that there are about 200 acres of land available for future expansion," he said.
"There is a lot of competition in the bidding, and bidders come from across the globe."
Due to the strong interest seen in the tender, PDVSA has extended the bidding process into three phases instead of two, sources said.
In phase one, which ended in early July, the seller shortlisted an unknown number of bidders, based on preliminary information on the companies.
In phase two, which will end in early August, the seller had opened a data room to gather in-depth company information on the shortlisted bidders. "The number of shortlisted bidders will be narrowed down further at the end of July," the second source said.
In the last phase, PDVSA will engage in the final round of negotiations with the buyer or buyers.
The actual operational storage capacity was 13 million barrels out of the total capacity of 20 million barrels.
Of the total operational capacity, 4 million barrels are for crude storage and 9 million barrels for oil products.
The bulk of the oil products storage is used for fuel oil.
Some tanks at BORCO were not operational because of corrosion.
A third source said in June that the marine fuel business at the terminal would give the operator a net profit of about $25 million every year.
Besides Morgan Stanley and Nustar, other bidders could include Glencore (GLEN.UL: Quote, Profile, Research), Vitol (VIT.UL: Quote, Profile, Research), PetroChina (0857.HK: Quote, Profile, Research) and Petrobras (PETR4.SA: Quote, Profile, Research), traders said.
- Reuters Messaging: edgar.ang.reuters.com@reuters.net; e-mail: edgar.ang@reuters.com; +1 646 223 6057. Editing by Matthew Lewis
Reuters 16 07 07
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