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As part of its announced strategy to review and strengthen its bunker fuel marketing operations, NuStar Energy L.P. has today announced it has signed a fuel oil supply agreement with an unnamed "major fuel oil trading company".

According to NuStar, the agreement enables the company to create a back-to-back trading model in which NuStar purchases bunker fuel supply from this company to fulfill the needs of its customers in St. Eustatius and the Caribbean.

"This trading model will allow NuStar to reduce working capital tied to inventory, reduce exposure to price volatility and hedge ineffectiveness, and better manage operating expenses. In fact, the agreement will help NuStar lower its working capital expenses by $40 to $50 million, and save the company related attendant interest and hedging costs," NuStar said in a statement.

Commenting on the deal, Curt Anastasio, NuStar President and CEO, said: "This agreement is a very positive step in our efforts to strengthen the bunker marketing operations within our fuels marketing segment, which has been impacted by weak demand and difficult market conditions.

"This agreement allows us to remain in a competitive position as a bunker fuel marketer, while reducing our exposure to price risks and dramatically reducing our working capital expenses related to our bunker marketing operations. We also believe that it creates opportunities to grow our fuel oil business in the Caribbean."