Independent liquids terminal and pipeline operator, NuStar Energy L.P. NS, has extended a naptha storage and transportation agreement with PMI – an affiliate of Mexico’s Pemex.
Per the 10-year agreement, naptha produced at Pemex’s Reynosa-Burgos Complex in Mexico will be transported to a terminal in Edinburg, TX, owned by Nustar. The naptha – a gasoline blending component – will be transported via NuStar Burgos-Valley pipeline system. From the Edinburg terminal it will then be transferred to Transmontaigne’s terminal in Brownsville.
Nustar has constructed a 50,000-barrel naphtha storage tank at the Edinburg Terminal as part of the project’s 80,000-barrel storage capacity.
The agreement – which started on Apr 1, 2015 – extends a previous 10-year agreement that was signed by the parties in 2005. This agreement and the associated investments are expected to be immediately accretive to NuStar’s earnings.
Management at NuStar added that they are also continuing work on the previously announced propane transportation project with PMI.
San Antonio, TX-based NuStar Energy is a master limited partnership engaged in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, and the U.K. The partnership is the second-largest independent liquids terminal operator in the nation.
The partnership owns a high-quality, large and diverse asset portfolio. Moreover, it holds a strong track record for distribution growth. However, we are concerned about the firm’s high debt levels, which leave the partnership vulnerable to an extended downturn.
Currently, NuStar carries a Zacks Rank #3 (Hold).
Better-ranked players from the industry include Valero Energy Partners LP VLP, Energy Transfer Equity, L.P. ETE and Sunoco Logistics Partners L.P. SXL. All these stocks sport a Zacks Rank #1 (Strong Buy).
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