22 April 2014

Sint Eustatius' Nu Star diversifies its oil storage market



(Reuters) - Petroleos de Venezuela (PDVSA), which urgently needs space in the Caribbean to store its oil, has emerged as the renter of tanks owned by NuStar Energy (NS.N) on the island of Saint Eustatius, where the Venezuelan state-run company will blend crudes, sources close to the transaction told Reuters.

NuStar, a San Antonio, Texas-based pipeline and terminals company, said last month it signed a long-term agreement to lease parts of its facility on the Caribbean island to a national oil company, but did not disclose the name of its client.

"The company renting the tanks in Saint Eustatius is PDVSA. They will use the facility as a mixing hub to produce blends that can then be exported," one of the sources said.

After selling terminals to raise cash, PDVSA now must rent space in the Caribbean to store its oil, produce a wider portfolio of blends, and handle trading as it imports more fuels. It also needs the facilities to load large tankers to be sent to Asia, which has become its main market.

In a global market oversupplied with oil, the NuStar facility is one of several PDVSA has leased in recent years, particularly since fires damaged its domestic storage network in 2012. In at least one case, it pays rent with oil because of its well-known cash flow problems.