April 20, 2016 [OPIS] - Limetree Bay Terminals, or LB Terminals, the new owner of the Hovensa oil terminal at St. Croix in the Caribbean, is now open for business, and it has received its first products in tanks recently, industry sources told OPIS on Monday.
The first products to be stored at the newly reopened LB Terminals are gasoline and diesel. The terminal is expected to receive some fuel oil barrels for storage soon, followed by crude in the second half of May. Sinopec is expected to take over 10 million bbl of capacity, mostly for crude storage at St. Croix. This will mark the emergence of Sinopec as a major crude player in the Caribbean and South American market.
Sinopec has an oil products and crude trading presence on the U.S. markets via its oil trading arm, Unipec. Unipec is focused on Asian and Chinese physical oil markets, but it has made a move to connect the dots around the world in the past few years.
Work remains in progress to bring more storage tanks into operational service. LB Terminals is also planning to convert some dirty products tanks which are used to store high-sulfur material to clean products such as gasoline and diesel. There is a growing demand for diesel storage everywhere in the world amid a rising supply glut.
On Jan. 8, LB Terminals took over the terminal in the U.S. Virgin Islands with a maximum 32-million-bbl storage capacity. It had plans for a full operational restart of 13 million bbl of oil storage capacity at that facility within a short span of a few months.
The first 13 million bbl of capacity is already spoken for. Sinopec will take over 10 million bbl of capacity, and Freepoint Commodities, a minority stake owner of Limetree Bay, will take over 3 million bbl.
In the second phase, another 13 million bbl of storage capacity would be brought onstream by the end of summer, depending on demand from potential customers.
LB Terminals are continuing to negotiate with third-party customers, other than Sinopec and Freepoint, on St. Croix storage contracts.
These Caribbean tanks could be used for storing and blending crude as well as storing gasoline, diesel, propane and fuel oil.
The restart of St. Croix terminal is expected to have a long-term impact on storage demand, opening up another viable option for oil players in the Caribbean. St. Croix terminal is expected to compete with nearby terminals including Statia terminals, Buckeye’s St. Lucia and possibly Buckeye’s Yabucoa terminal in Puerto Rico.
The Limetree Bay terminal is an ideal storage facility catering to the Caribbean market and South America, based on its location.
Limetree Bay has the potential to be a “choice terminal” in the Caribbean, when compared with BORCO and Statia, for clean oil products due to its location relative to South America, in-line/closed loop blending capabilities and ship berths that are protected from weather, industry sources told OPIS last year.
Also, the terminal asset at St. Croix offers room for potential storage expansion as well, depending on capitalization of Limetree Bay, which is backed by rapidly expanding ArcLight Capital and Freepoint.
The St. Croix terminal restart is expected to have minimal impact on BORCO terminal in the Bahamas, which is much further north of the U.S. Virgin Islands.
BORCO terminal, which is owned by Buckeye, is more ideal for supplying the U.S. East Coast and Southeast markets, based on its closer proximity to the U.S. than Limetree Bay.
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