The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas Oil Refining Company's (BORCO) owner is targeting a 'crude oil topping unit' and 'bunker filling station' as new growth opportunities for the Grand Bahama-based storage and transshipment facility, it revealed in an investor presentation yesterday.

With BORCO having driven a 24.1 per cent increase in the adjusted operating income produced by New York Stock Exchange (NYSE) listed Buckeye Partners in the 2012 first quarter, the latter said there had bee "strong interest in setting up a crude topping unit" at its Grand Bahama asset.

This, Buckeye Partners said, was being driven by the demand for fuel with low sulphur content - something the Bahamas Motor Dealers Association (BMDA) and its members recently branded as essential to providing Bahamian consumers with the most efficient, lower cost diesel vehicle models.

The 'crude topping unit' might also generate export opportunities, Buckeye Partners said, while also focusing on the potential that might flow from blended fuel oil bunkering opportunities.

"BORCO is the logical, geographical, optimum spot for a new 'Bunker filling station'," Buckeye Partners said.

All this again highlights just how strategic an asset BORCO is for Buckeye, and the latter's future business and earnings growth. The exploration of new business opportunities comes fresh off a 2012 first quarter in which BORCO secured a "key commercial win" through a long-term contract that supports a further 1.2 million barrel oil storage capacity expansion.

Buckeye said these 1.2 million barrels were expected to be in service by the 2013 third quarter. They are in addition to its existing 3.5 million barrel storage capacity expansion at BORCO, with 1.9 million barrels of this capacity online by the second half this year.

They will store a combination of refined and fuel oil products, with the remaining 1.6 million barrels completes by the 2013 first half.

Breaking down BORCO's 2011 revenues, Buckeye said 83 per cent came from 'take or pay' storage contracts, with 11 per cent generated by berthing fees and 6 per cent from ancillary services.

When it came to the facility's current 21.4 million barrel capacity, some 66.4 per cent was leased for fuel oil storage and 20.5 per cent for crude oil, the remaining 14.3 per cent going to refined products.

Describing BORCO as "world class", Buckeye said it "serves as an important logistics hub for international petroleum product flows".

It highlighted the Grand Bahama-based facility's importance in its 10-Q document filing with the SEC for the 2012 first quarter, saying: "The International Operations segment's revenue generated in the Bahamas was $46.1 million and $41.4 million for the three months ended March 31, 2012, and 2011, which represented 91.8 per cent and 91.9 per cent, respectively, of the International Operations segment's total revenue for the periods."