January 30, 2014 [Reuters] - TransMontaigne Partners LP has agreed to lease capacity at two oil product terminals and a pipeline to Magellan Pipeline Company LP under a 10-year deal, ending its current agreement with Morgan Stanley, TransMontaigne announced on Wednesday.
The agreement with Morgan Stanley to lease these facilities will end on Feb. 28, 2014, as the investment bank’s once-powerful trading arm reduces its physical footprint.
In December, the bank agreed to sell its physical oil business to state-owned Russian oil company Rosneft.
Morgan Stanley’s trading division, Morgan Stanley Capital Group, owns 100 percent of TransMontaigne Inc, which controls the general partner of Denver-based TransMontaigne Partners LP. Morgan Stanley is also TransMontaigne’s largest client.
The bank announced in December that it was seeking to sell its TransMontaigne stake.
The agreement announced in a TransMontaigne statement on Wednesday covers all of the aggregate 400,000-barrel capacity of two oil product terminals in Rogers, Arkansas, and Mount Vernon, Missouri, and the 30,000-barrel-per-day (bpd) Razorback oil product pipeline, a TransMontaigne official said in a telephone interview.
The terminals represent about 2 percent of the company’s total tank capacity. The Razorback Pipeline runs from Mount Vernon to Rogers and accounts for most of the company’s pipeline capacity.
TransMontaigne Partners LP is a terminal and transportation company that services distributors and marketers of crude oil and refined petroleum products across the United States.
Pipeline transport fees accounted for 3 percent to 4 percent of total revenue for TransMontaigne last year, a company official said. The bulk of its revenue comes from terminal services.
TransMontaigne management expects the new agreement will generate about the same total annual revenue as the Morgan Stanley agreement, the statement said.
The company did not give a figure for the revenue generated by the agreement. However, in its 2012 annual report, TransMontaigne said Morgan Stanley Capital Group accounted for more than 60 percent of its revenues in 2010, 2011 and 2012. In 2012, TransMontaigne reported total revenue of $156.2 million.
Tulsa, Oklahoma-based Magellan owns 9,600 miles of refined products pipelines, according to the company’s website, making it one of the longest such pipeline systems in the United States.
Magellan Pipeline is a wholly owned affiliate of Magellan Midstream Partners LP.
