Morgan Stanley to sell TransMontaigne ownership stake to NGL Energy Partners

Transaction is expected to close in the third quarter of 2014.

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Updated on 12 Jun 2014 08:02 GMT

Morgan Stanley has confirmed that it has reached a "definitive agreement" to sell its controlling stake in TransMontaigne Inc., a U.S.-based oil storage, marketing and transportation company, to NGL Energy Partners LP..

The sale includes Morgan Stanley’s general partner and limited partner interests in TransMontaigne Partners LP, as well as related physical inventory and the assumption of Morgan Stanley’s obligations under certain terminal storage contracts.

The deal essentially ends Morgan Stanley's long run as the biggest physical oil trader on Wall Street.

Commenting on the news, Colm Kelleher, President of Institutional Securities at Morgan Stanley, said: "Following this transaction, Morgan Stanley's leading commodities division will be leaner, more client focused and better aligned with the rest of the Firm’s businesses. We are excited about its future prospects and look forward to continuing to service the supply and risk management needs of our clients across the oil, power and gas, and metals sectors."

The transaction is subject to regulatory approvals in the U.S. and is expected to close in the third quarter of 2014.

BOSTCO Terminal

TransMontaigne Partners L.P. has a 45 percent ownership of the 185-acre Battleground Oil Specialty Terminal Company, LLC (BOSTCO) on the Houston Ship Channel. The remaning 55 percent is owned by Kinder Morgan Energy Partners, L.P.

Construction of the new terminal began in December 2011, and the initial startup of operations was in October 2013. The first phase of the project includes construction of 51 storage tanks with a capacity of 6.5 million barrels for handling residual fuel, feedstocks, distillates and other black oils. The project includes deep draft docks enabling BOSTCO customers to utilize the largest ships capable of accessing the Houston Ship Channel.

Phase two of construction at BOSTCO is underway and involves the construction of an additional six, 150,000-barrel, ultra low sulphur diesel tanks, additional pipeline connectivity and high-speed loading at a rate of 25,000 barrels per hour. BOSTCO expects phase two to begin service in the fourth quarter of 2014.