July 29, 2011 [The Tribune] - The Bahamas Oil Refining Company's (BORCO) is still targeting a "longer term opportunity" to double the Grand Bahama-based facility's existing 21.6 million barrel storage capacity, with its existing $350-$400 million project on target to complete in the 2012 second half.
In a presentation to conferences organised by Swiss bank UBS, New York Stock Exchange (NYSE) listed Buckeye Partners remained upbeat on its new $1.7 billion acquisition, noting that BORCO’s existing storage capacity was “fully contracted”, with “current demand levels well in excess of available capacity”.
Most clients of the Grand Bahama-based facility were transnational and national oil companies, who were locked into three-five year contracts, Buckeye said. Some 80 per cent of BORCO’s revenues came from storage contracts, with 11 per cent generated by ship berthing, and the remaining 9 per cent from ancillary services such as blending, bunkering and transshipment.
Amid a “high likelihood of contract renewals’ by its existing customer base, Buckeye said some 10.2 million barrels of storage capacity at BORCO was taken by major international oil companies.
Another 4.3 million barrels was occupied by national oil companies, with 3.8 million barrels worth of capacity taken by energy trading firms and 2.5 million by energy companies.
Billing BORCO as the “fourth largest petroleum products terminal” in the world, Buckeye said the first phase of its immediate-term expansion would add 3.5 million barrels of storage capacity.
This had been “initiated in the second quarter of 2011”, with the “first incremental capacity expected to be online in the second half of 2012”. A second phase, which will add another 4.4 million barrels of storage capacity, is expected to start later, taking the additions to 7.9 million barrels.
The project is expected to require an $350-$400 million investment, and generate an extra $70-$80 million in annual operating income for BORCO. And, looking to the future, there was “room to double existing storage capacity”.
Buckeye also told the UBS conference that fuel oil accounted for 64 per cent of BORCO’s stored products, with crude oil at 23 per cent.
“BORCO is strategically positioned to act as a hub in facilitating international logistics and trade for bulk build, break-bulk and blending operations,” Buckeye said, noting that it exported product to China and Singapore, and received from as far away as India.
BORCO’s 100 per cent owner also noted that that facility was 80 miles from south Florida, and 920 miles from New York, with deepwater access of up to 91 feet for tankers.
