bp to acquire remaining stake in U.S. pipelines partnership
British energy major bp p.l.c. and its affiliates have entered into a definitive agreement to acquire the remaining stake in its U.S. pipelines partnership BP Midstream Partners LP (BPMP) that it does not own.
The agreement is In line with bp’s strategy to become an integrated energy company. The transaction will “deepen bp’s interests in, and simplifies the ownership and governance structure of, midstream assets that support integration and optimisation of its fuels value chain in the U.S.,” bp said.
BP Midstream Partners is a fee-based master limited partnership formed by BP Pipelines, an indirect wholly owned subsidiary of bp, in May 2017, to own, operate, develop and acquire pipelines and other midstream assets. Its assets consist of interests in entities that own crude oil, natural gas, refined products and diluent pipelines, and refined product terminals, serving as key infrastructure for bp and other customers to
transport onshore crude oil production to bp’s Whiting Refinery in Whiting, Indiana, U.S.A., and offshore crude oil and natural gas production to key refining markets and trading and distribution hubs.
bp, which owns approximately 54% of BP Midstream Partners, made an offer in August 2021 to acquire the publicly traded units of BPMP, representing 47,837,828 common units.
In an all-stock transaction, each unitholder of the Public Common Units would receive 0.575 of an American Depositary Share of bp in exchange for each Public Common Unit owned of BPMP.
The transaction is expected to close in the first quarter of 2022, subject to customary approvals.
The oil and gas industry has financed billions in pipeline and storage products under tax-advantaged MLPs since the 1980s.Several pipeline companies have restructured in recent years after U.S. regulators said they will no longer be allowed to recover an income tax allowance.
In October, Phillips 66 announced that it will buy the remaining units of Phillips 66 Partners for USD3.4 billion. Phillips 66 Partners was formed by Phillips 66 to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines, terminals and other midstream assets.