San Antonio, Texas-based NuStar Energy has recorded a rise in storage-related earnings.
Its transportation and storage businesses generated an incremental $39 million (28 million) of segmental earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2009 compared to 2008.
While many MLPs suspended their distribution, reduced it, or just maintained the distribution at current levels, NuStar Energy provided its investors a nearly four percent distribution increase and still maintained a solid distribution coverage ratio of 1.33 times, Curt Anastasio, CEO of NuStar Energy, says.
This was mainly due to the performance of our fee-based storage and transportation business segments, which demonstrated relative stability during the year despite weak refined product demand in 2009.
A strong tariff increase of 7.6% effective from 1 July 2009 on its interstate pipelines, higher renewal rates at certain storage terminals and the completion of storage expansion projects under its previous $400 million construction programme all contributed to higher results in these two segments.
Our fee-based transportation and storage segments should continue to be relatively stable in 2010 as we expect to primarily benefit from projects started last year and higher renewal rates. To the extent the economy recovers, we expect this will also positively impact these segments.
'We do not expect to see as much incremental contribution in 2010 compared to 2009 since we reduced our 2009 growth capital in response to the financial crisis. However, we have significantly increased our internal growth programme in 2010 to over $310 million, most of which are long-term contracts with guaranteed rates of return, and we should start to the see the benefit from these later in 2010 and more so in 2011.'
NuStar Energy owns and operates 8,417 miles of crude oil and refined product pipelines; 82 terminal facilities that store and distribute crude oil, refined products and specialty liquids; four crude oil storage tank facilities; and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. The partnerships combined system has over 91 million barrels of storage capacity.