The publicly-traded oil storage terminal and pipeline company has joined forces with S-Oil and Aves. S-Oil has more than 190 retail fuel outlets in Turkey and the eighth-largest importer of fuel into the country. Aves is a commodity trading company active in Mediterranean gasoil and diesel markets.
The deal, for which NuStar paid between $50 million and $60 million is slated to close in October.
The move marks an expansion of NuStar’s international footprint which currently includes the Netherlands, United Kingdom, Canada, Mexico and the Netherlands Antilles and of its fuel marketing business.
NuStar President and CEO Curt Anastasio lauded the “great strategic advantages” of the Mediterranean region.
“Turkey has a booming economy, and petroleum demand is increasing significantly faster in Turkey than other European countries,” he said in a statement that included second-quarter earnings results. “Petroleum supply and demand imbalances in the Mediterranean region present strong logistics opportunities,” he added.
For Turkey, the deal positions them to profit from the expected ramp-up in oil production from Iraq and Kazakhstan as well as to meet their obligations to maintain strategic petroleum stocks. Senan Idin, chairman of Aves and S-Oil,
called the partnership “an important stepping stone for reaching Turkey’s long-term goal to become an energy corridor country.”
“Turkey is a key country for transportation of Iraqi, Russian and former Soviet Union (FSU) countries’ tremendous oil and natural gas resources to world markets,” he said in the NuStar statement announcing the deal.
The joint venture will own the two terminals, which are located in Mersin, Turkey. An existing terminal owned by S-Oil has 606,000 bbl of storage in 20 tanks, mostly for gasoil and distillates. The other terminal, owned by Aves, begins operations in August. It has capacity of 740,000 bbl in 24
tanks, mostly for oil products. Both have truck racks.
The joint venture plans to expand combined storage capacity by another 930,000 bbl by the end of 2011, according to NuStar’s statement.
The terminals are connected by pipelines to the SAVKA offshore platform, which will be 67% owned by the joint venture. The facility can simultaneously offload product from two Aframax-size vessels that weigh up to 80,000 dwt each.
Established in 2007 after separating from Valero, NuStar has been primarily an asphalt supplier in the U.S. In March, Northeast industry sources told OPIS the company had pulled out of the wholesale fuel market at Linden, N.J., after
a similar move along the Colonial pipeline system six months prior.
Industry sources have expected NuStar to put its U.S. focus on wholesale gasoline and diesel markets in the Mid-Continent and Texas.
On Monday, NuStar reported adjusted second quarter net income applicable to limited partners of $70.1 million, or $1.13 per unit, up from an adjusted $56.7 million or $1.04 per unit for the same period last year.