Inter Pipeline's storage segment was impacted by challenging market conditions in Europe, affecting demand for capacity.
In its 2018 financial results, the company's funds from operations for its terminal division were down from $97.6 million in 2017 to $65.9 million in 2018 and its fourth quarter 2018 funds from operations were also down.
At the end of 2018, the company completed the acquisition of NuStar Energy's European bulk liquid storage business for $270 million. The acquired business consists of seven high-quality storage terminals strategically located throughout the UK and within the Port of Amsterdam. Historically, these assets have generated stable cash flow that is underpinned by a variety of cost-of-service and fee-based contracts.
Storage demand for certain petroleum products in Europe continued to be impacted by a backwardated commodity pricing environment. Average utilization rates during 2018 were 77% compared to 96% in 2017.
Utilisation in the fourth quarter averaged 68% across all terminals. Terminals in Sweden, the UK, the Netherlands and Germany all posted rates in excess of 90%. Unfavourable market conditions continued to impact Danish operations resulting in depressed utilization rates.
However, recent contracts have improved rates, particularly in Denmark. In January, utilisation rates across all European terminals rose to 78%.
Overall, Inter Pipeline's annual funds from operations totaled a record $1.1 billion, an increase of 10% compared to 2017.
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