Buckeye Partners to buy $860 million in Trafigura Eagle Ford midstream assets

HOUSTON — Buckeye Partners L.P. said Tuesday it would enter the fast-growing Eagle Ford region with an $860 million deal to acquire an 80 percent interest Trafigura AG’s South Texas midstream assets.

The deal will create a new joint venture – called Buckeye Texas Partners – to operate a deep-water shipping terminal on the Corpus Christi ship channel, a condensate splitter and storage complex in Corpus Christi and three crude oil and condensate gathering facilities in the Eagle Ford region. When completed, Buckeye will be able to move condensate, a type of very light oil, from the Eagle Ford area directly to the terminal in Corpus Christi, the company said in its announcement.

The deal is expected to close later this month, according to a release from Buckeye. Buckeye will acquire an 80 percent majority interest in the assets held by Trafigura Terminals LLC, while Trafigura will retain a 20 percent stake.

Buckeye also plans to spend $240 million to $270 million on  improvements to the system that will bring the total liquid petroleum products storage capacity of the Corpus Christi site to 5.6 million barrels. The company is also building a 50,000-barrel-per-day condensate splitter that is expected to be completed by 2015.

The Corpus Christi terminal has five vessel berths, three of which are deep-water docks. The site also includes truck and rail car loading and unloading facilities.

Trafigura AG is an international commodities trading and logistics company. Houston-based Buckeye Partners is a master limited partnership that owns a number of midstream assets focused on the transportation, storage and marketing of liquid petroleum products.

Buckeye also announced on Sept. 2 that it will offer 5.5 million limited partnership units for sale. The proceeds from the offering will finance a portion of the Trafigura deal.