Kinder Morgan in $962m Jones Act tanker foray

Energy pipeline and storage specialist KMP is adding shipping to its portfolio buying American Petroleum Tankers (APT) and State Class Tankers (SCT). APT has a fleet of five MR Jones Act tankers that are on long term charters. SCT has four MR Jones Act tankers under construction at General Dynamics’ NASSCO shipyard and due for delivery in 2015 and 2016.

“This is a strategic and complementary extension of our existing crude oil and refined products transportation business,” said John Schlosser, president of KMP’s Terminals segment. “Product demand is growing and sources of supply continue to change, in part due to the increased shale activity. As a result, there is more demand for waterborne transportation to move these products. We are purchasing tankers that provide stable fee-based cash flow through multi-year contracts with major credit worthy oil producers.”

“Blackstone and Cerberus are pleased to have founded and built American Petroleum Tankers into a market-leading Jones Act tanker company,” said Sean Klimczak, senior managing director at Blackstone. “We have enjoyed our partnership with APT’s management team and wish them continued success with Kinder Morgan in this next phase of APT’s growth.”

KMP will have to invest a further $214m for the completion of the tankers ordered by SCT. The deal is subject to regulatory approvals and is expected to close in the first quarter of 2014.