The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Oil Refining Company’s (BORCO) owner is optimistic that it will recover the full $25 million in damage caused when a ship collided with one of the Grand Bahama-based facility’s jetties.

New York Stock Exchange (NYSE) listed Buckeye Partners, in its 10-Q filing with the Securities & Exchange Commission (SEC), said it was awaiting a Bahamian court ruling to determine if the ship’s owner could limit its liability to $17 million.

Detailing the incident, Buckeye Partners said: “On May 25, 2012, a ship collided with a jetty at our BORCO facility while berthing, causing damage to portions of the jetty.

“The extent of the damage is presently estimated to be approximately $25 million. Buckeye has insurance to cover this loss, subject to a $5 million deductible. “

Buckeye and BORCO took legal action in the Bahamas the following day against the shop and its owner, in a bod to obtain security for the cost of repairs and other losses incurred.

“Full security for our claim has been provided by the vessel owner’s insurers, reserving all of their defenses,” Buckeye added.

“We also have notified the customer on whose behalf the vessel was at the BORCO facility that we intend to hold them responsible for all damages and losses resulting from the incident pursuant to the terms of an agreement between the parties.”

As to the current state of the claim, Buckeye added: “The vessel owner has claimed that it is entitled to limit its liability to approximately $17 million, but we are contesting the right of the vessel owner to such limitation.

“A hearing in the Bahamas court on the vessel owner’s right to limit its liability was held on July 23, 2013, and we are awaiting a ruling on the issue.”

The NYSE-listed company said repairs to the damaged jetty were “substantially complete”, and it was “probable” that its losses would be fully recovered.

Meanwhile, BORCO’s revenues for the 2013 second quarter and first half were up year-over-year by 14.6 per cent and 14.5 per cent, respectively.

“The International Operations segment’s revenue generated in the Bahamas was $54.1 million and $47.2 million for the three months ended June 30, 2013 and 2012, respectively,” Buckeye said.

“For the six months ended June 30, 2013, and 2012, the International Operations segment’s revenue generated in the Bahamas was $106.8 million and $93.3 million, respectively.”

For the 2013 second quarter, BORCO’s ongoing expansion drove a $6.7 million increase in storage revenue, while there was a $1 million “increase in ancillary revenues” from ship berthing and heating services due to increased customer use.

“The increase in revenue was offset by a $1 million increase in operating expenses primarily due to increased costs necessary to operate the expanded capabilities of the BORCO facility and one-time costs related to certain organisational changes,” Buckeye added.

For the 2013 first half, BORCO saw an $11.3 million increase in storage revenue and a $2.6 million increase in ancillary revenues.