BP SELLS STRATEGIC OIL STORAGE ASSETS TO MAGELLAN
Baku, July 14 (AZERTAC). BP Plc said on Tuesday it will sell a strategic crude oil storage facility in Oklahoma and some pipeline systems to Magellan Midstream Partners LP in its first major asset sale since its Macondo oil well in the Gulf of Mexico blew out in April.
Magellan will pay $289 million for the British oil giant`s storage terminal at Cushing, Oklahoma, the delivery point for U.S. crude futures, along with crude and refined products pipeline systems in Texas.
BP will lease back the 7.8 million barrels of tank storage space at Cushing for several years.
The sale, which has been in the works since February, is not part of BP`s plan to unload $10 billion in non-core upstream assets to help pay for the cost of the Macondo cleanup, BP spokeswoman Sheila Williams said.
In recent years, companies with tank facilities at Cushing have been able to turn big profits by storing crude and committing it for sale later, taking advantage of an oil market in contango, when crude for near term delivery sells at a discount to crude for delivery further in the future.
BP has long been known as an aggressive oil trader, and industry experts say it has leveraged its space in Cushing for its trading advantage.
Oil majors, including Shell, have sold off Cushing storage capacity in recent years and much is now owned by pipeline companies such as Canada`s Enbridge or, indirectly, by trading firms such as Vitol SA.
BP is the No. 3 holder of storage space at Cushing, after Enbridge and Plains LP, according to Reuters data.
Along with the Cushing tanks, Magellan will also acquire 100 miles of crude and oil product pipelines from BP, including 40 miles of pipelines between Houston and Texas City, the site of a 475,000 barrel per day BP refinery.
BP`s U.S.-listed shares were down 1.7 percent at $36.13 on Tuesday afternoon on the New York Stock Exchange. They have fallen by about half since BP`s Macondo well blew out in April, spewing crude oil into the Gulf of Mexico. Shares of Magellan were up 1.1 percent at $48.67.
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