BP Plc (LON:BP) has agreed to sell 15 fuel storage terminals across the US to Houston-based pipeline behemoth Kinder Morgan for $350 million (£227 million), the two companies said yesterday.
14 of the terminals will be held in a joint venture, in which Kinder Morgan will own 75 percent with BP holding the rest. The one remaining terminal will be owned solely by Kinder Morgan.
BP will continue to use the terminals, which can store 9.5 million barrels of refined products in total, as key distribution hubs, the company said. The JV also plans to market spare capacity to third parties, Kinder Morgan noted.
“It (deal) enables BP to maintain strategic access to terminals nationwide, while reducing operating costs and complexity,” said Doug Sparkman, president of BP’s East of Rockies fuels business.
The transaction is expected to close in the first quarter of 2016.
Kinder Morgan has met market expectations that it will ramp up M&A activity this year, as the depressed oil price pressures upstream-exposed companies. In July, the Houston-based firm bought the stake of Anglo-Dutch oil major Shell in an LNG joint venture.
On the other side, analysts noted the move on BP’s part was probably prompted by the recent $20 billion settlement of claims relating to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. To date, the London-based company has incurred over $53 billion in costs stemming from the incident, forcing it to slash spending and sell assets.
Meanwhile, BP is expected to announce a strategic partnership with China’s state-owned energy giant CNPC during President Xi Jinping’s visit to the UK this week.
The immediate objective of the tie-up is thought to be around the development of the giant Rumaila oilfield in Iraq, but future cooperation will include other projects in Iraq and in other regions, sources have said.
BP’s share price gained 1.55 percent to 382.40p as of 10:25 BST today, outperforming the FTSE 100 which had advanced only 0.2 percent. BP’s stock has appreciated nearly 20 percent over the past three weeks, as positive global cues bumped commodities up.
As of 10:37 BST, Wednesday, 21 October, BP plc share price is 380.40p.
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