By ALISON LOWE
FREEPORT, GRAND BAHAMA- The new Bahamas Oil Refining Company (BORCO) owner's plans for an immediate $400 million expansion of the Grand Bahama facility were yesterday heralded as "obviously exciting" for the island, being likely to result in new "employment and entrepreneurial activities" for residents.
"If they are talking about doubling capacity then (the new owners) are my best friend," K. Peter Turnquest, president of the Grand Bahama Chamber of Commerce, told Tribune Business.
Buckeye Partners, which has acquired First Reserve Corporation's 80 per cent stake in BORCO, revealed on Monday that it intends to invest $400 million in an expansion of the oil storage and transshipment facility, which will facilitate current storage capacity being "more than doubled" to 45 million barrels worth.
"We see this as a near-term opportunity we'd like to hit the ground on as soon as we close," said a Buckeye Partners executive in a conference call with Wall Street analysts.
The $1.36 billion acquisition is expected to be completed in the first quarter of 2011, with the expansion set to add $70 - 80 million in per annum operating income "phase in over two to three years" for the company.
Mr Turnquest said: "This is a business that has proven relatively stable for us, so it's obviously exciting when we see international investors still being interested in building that facility and increasing capacity.
"Any expansion will obviously result in additional employment and entrepreneurial opportunities for local businesses, and we've seen a number of marine-type entities getting off the ground in the last year, so that all obviously bodes well for what we are trying to do here in Grand Bahama in terms of becoming renowned centre for transportational logistics."
Buckeye Partners said the attraction of the Freeport facility is that it has a "world class customer base" and a major surplus in customer demand, something that supported the expansion and generation of increased cash flows for the company.
BORCO's location amid the Caribbean and Atlantic shipping lanes, plus its proximity to the US, were also deemed advantages, the facility being "strategically positioned to act as a hub in faciltiating international logistics".
Meanwhile, Buckeye Partners is also eyeing the potential for the facility to act as a build bulk and break bulk hub, where cargo could be collected together or broken down into smaller parcels for further onward transportation.
The Government is set to benefit from the acquisition in the form of a multi-million stamp tax windfall that could amount to anywhere between $64 million and $100 million.