Kinder Morgan, BP form fuel storage JV
BP Plc will sell 15 fuel storage terminals in the United States to pipeline company Kinder Morgan Inc in a $350 million deal, as it sheds assets to pay for liabilities arising from its 2010 Gulf of Mexico oil spill.
U.S. Attorney General Loretta Lynch said earlier this month that BP would have to pay more than $20 billion in fines to resolve claims arising from the Macondo well blowout, which killed 11 workers and spewed more than three million barrels of crude oil into the sea.
BP has said its total pre-tax charge for the disaster is now about $53.8 billion.
The two companies will form a joint venture to hold 14 of the 15 terminals being sold. Kinder Morgan will have a 75 percent stake in the venture with BP holding the rest.
The pipeline company will have sole ownership of one terminal.
“It (deal) enables BP to maintain strategic access to terminals nationwide, while reducing operating costs and complexity,” said Doug Sparkman, a BP executive.
BP will continue to use the terminals as key distribution hubs for gasoline and other refined products, the company said.
The terminals, which can store about 9.5 million barrels of refined products, are located across the United States.
However, the deal does not include all of BP’s U.S. fuel storage terminals. The company will continue to own terminals in Indiana, Iowa, Oregon, Washington and New Jersey.
BP’s strategy of paying liabilities by selling assets has eroded about a fifth of its earnings base before 2010.
On the other hand, Kinder Morgan has continued to expand at a rapid pace.
Kinder Morgan, which consolidated its various units into a single public company last year, bought out Royal Dutch Shell Plc’s stake in a U.S. natural gas joint venture in July.
The deal followed the company’s $3 billion acquisition of pipeline and logistics company Hiland Partners earlier this year.
Kinder Morgan shares were up marginally at $31.77 in morning trade on the New York Stock Exchange.
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