Buyout firms put energy infrastructure in pipeline

( Reuter )- Private equity firms are snapping up energy infrastructure assets like pipelines and storage facilities, which are some of the few buyouts likely to attract financing as credit markets remain in a deep freeze.

Firms keen to put capital to work say their ability to spend immediately on infrastructure makes them ideal buyers when energy companies jettison assets, as with First Reserve's recent deal to buy a 20 million-barrel storage terminal off the Florida coast -- the Caribbean's largest.

"These are assets that the majors need to access and influence but may not want to completely own or take the risk of building out," First Reserve Managing Director Thomas Sikorski said. "If we can position ourselves in the middle of that, we start acting truly strategic."

Opportunities may be picking up. Cheniere Energy (LNG.A) recently said it was looking at strategic options for its Sabine Pass LNG receiving terminal in Louisiana, near the Gulf of Mexico. And First Reserve, an energy-focused private equity firm, agreed to join with Blackstone Group (BX.N) and Europe's Petroplus Holdings AG (PPHN.VX) in a $2 billion deal to buy U.S. oil refineries.

Such assets may let private equity take advantage of the red-hot energy sector without the risk tied to exploration and production (E& P). Also, cash flow from long-term contracts could help them tap today's ultra-tight credit markets.

"From the point of view of private equity, they're a steady stream of income," said Dino Barajas, a partner at law firm Paul Hastings who works on energy and power deals. "You don't really care if someone's using your pipeline -- if they've contracted for the capacity, there's your check in the mail."

Private equity firms envision compiling a network of infrastructure assets worth more than the separate components.

These assets are often overlooked by oil companies. With crude prices hovering around $100 a barrel, those companies have invested in E& P or share buyback programs rather than on relatively low-return infrastructure assets.

"We've had interesting conversations where E& P companies say: 'We just don't get rewarded for running a great midstream business,"' said Christopher Behrens, a managing director of CCMP Capital Advisors, the former private equity arm of JPMorgan Chase & Co (JPM.N).

Behrens added that private equity makes a good partner for those companies "because of the size of checks we can write and our ability to commit for a relatively long period of time."

Private equity firms have an advantage in developing energy infrastructure, particularly in comparison to the master limited partnerships (MLPs) that have become a popular structure for holding such assets. MLPs pay no corporate taxes, but distribute most of their profits to investors and often have to rely on external financing to fund growth.

"The idea is to get gas out of the regions where it sits and into consuming regions," said Lee Mallett, a managing director in the energy investment banking group at Credit Suisse (CSGN.VX), which is advising Cheniere on Sabine Pass.

The U.S. Southeast is ripe for such development, Mallett said, and market sources say there is plenty on sale, including other storage facilities in Florida and nearby states.

Sikorski said First Reserve is also developing a strategy in the Southeast -- and is considering eventually forming an MLP with its U.S. assets.

Opportunities for private equity in energy infrastructure are not limited to the United States. Among the regions the firms say they are considering are areas surrounding Singapore and around the Strait of Hormuz in the Middle East.

"When you start looking around the planet and tracking these global flows, everybody has the same problems," Sikorski said. "Really it's just logistics."

Britain reports 2,027 new COVID-19 cases, seven deaths
Britain reports 2,027 new COVID-19 cases, seven deaths
Iranian, Spanish FMs exchange views on economic, trade coop.
Iranian, Spanish FMs exchange views on economic, trade coop.
France's import value of Turkish cement rises
France's import value of Turkish cement rises
Loading Bars
IS claims responsibility for Kabul mosque attack
More than 677,000 COVID-19 infections detected worldwide over past 24 hours
Chamber of Commerce hopes Iran's trade to improve as COVID-19 spread declines
Iran to hold conference on electrical engineering
Weekly review of Azerbaijani oil market
Uzbekistan to restore air communication with Saudi Arabia
Georgian Parliament Speaker to pay official visit to Brussels
Britain reports 2,027 new COVID-19 cases, seven deaths
Emergency session of OIC to be held on May 16 at Turkey’s initiative, Ankara says
Turkey aims to create electric vehicle market
Uzbekistan imported more than 200 million liters of gasoline in Jan-Apr 2021
Iranian, Spanish FMs exchange views on economic, trade coop.
Kazakh, Polish, Ukrainian and Arabian airlines to resume flights to Batumi
All international airlines halt air service with Israel
IDF confirms its strike on Gaza building after advance warning to civilians
Azerbaijani and Tajik FMs discuss situation on Azerbaijani-Armenian border
Fitch Ratings forecasts inflation rate in Azerbaijan for 2021-22
Nordwind launches direct flights from St. Petersburg to Baku from May 18
US ambassador to Azerbaijan, USAID director meet with Azerbaijani MP
Shooting occurred on border with Iran, two Azerbaijani border guards were killed
Suez Canal starts dredging work to extend double lane
At least 2,300 missiles fired at Israel from Gaza Strip since May 10
Africa's COVID-19 cases pass 4.67 mln: Africa CDC
Turkish Airlines resumes flights to Azerbaijan's Ganja (PHOTO)
Azerbaijan shares data on number of vaccinated citizens for May 15
France's import value of Turkish cement rises
Azerbaijan confirms 377 more COVID-19 cases, 1,318 recoveries
Azerbaijan's government budget deficit to narrow in 2021-2022 - Fitch Ratings
Azerbaijan's olive oil company entering Russian market
Turkey's revenues from exporting electrical goods to France increase
Fitch Ratings anticipates Azerbaijan's GDP growth in 2021
Value of Georgia's import of Turkish clothes grows
China's import value of Turkish electrical goods up in 4M2021
Turkey unveils number of ships docking at Tuzla port in 1Q2021
French import of grains from Turkey rises in value
Fitch predicts growth in foreign direct investments in Azerbaijan
U.S. requires inspections for wire failure on Boeing 737 Classic planes
Azerbaijani oil prices rebound
Iran hoping to overcome 4-th peak of COVID-19
Iran worried about blackouts due to cryptocurrency mining at homes
Georgia increases exports of beer
Kazakhstan's import value of Turkish electrical goods disclosed
Kazakhstan’s postal operator to engage repair services via tender
Kazakh energy company opens tender for buying isolators
Uzbekistan's import value of Turkish electrical goods notably up
Walmart says fully vaccinated employees can go without masks starting Tuesday
Azerbaijani president, first lady visit secondary school No 1 and Saint Elisæus Jotaari Church in Nij settlement, Gabala (PHOTO)
Georgia reports 1,576 new cases of COVID-19
Iran hopes to start exporting gas if Vienna talks are successful
Iran's 4M2021 import of Turkish grains doubles in value
Turkey reveals 1Q2021 volume of cargo shipment via Trabzon port
Value of Turkish cement export to Germany rises
EBRD to back development renewable energy projects in Georgia
Azerbaijani president, first lady attend opening ceremony of Gabala Railway Station and Laki station - Gabala single-track railway (PHOTO)
Azerbaijani president, first lady attend opening ceremony of new bridge over Bum River, road to Bum settlement after renovation (PHOTO)
Azerbaijani president, first lady visit Albanian Church of Blessed Virgin Mary in Nij settlement, Gabala (PHOTO)
Azerbaijani president, first lady arrive in Gabala district (PHOTO)
Iran inaugurating more projects in Chabahar port
Romania’s Romgaz lowers natural gas output q-o-q
No provocative actions against Russian peacekeepers noted in Karabakh - MoD
Casualties due to landmines in Azerbaijani liberated territories addressed at online conference
India: Modi releases 8th instalment of PM-KISAN benefits
Fitch revises outlook on Azerbaijan's IDR
Armed forces spearhead India’s Covid battle
UN Secretary-General counts on cooperation with Russia in supporting peace and stability
Romgaz’s investments turn out to be 39% less than planned
Spain logged hottest year on record in 2020
Romgaz sees over 7% decrease in Q1 2021 revenues
Khari Bulbul festival in Azerbaijan's Shusha became message to the world - MP
TAP AG joins other partners to submit White Dragon for IPCEI status
UAE urges Mideast ceasefire, offers condolences to all victims
Vienna Energy Research Group talks Iran's capacity in oil production, int'l oil sales
Iran to invest in Afghanistan's infrastructure projects
Petrochemical revenues to become less volatile, says McKinsey & Co.
Tickets for UEFA EURO 2020 matches in Baku up on sale (PHOTO)
Georgia’s subsistence minimum up
Azerbaijan to have two routes to Turkey within BTK corridor
Europe has right conditions for "safe reopening" of tourism in summer - EU Commissioner
Georgian-Lithuanian co-op facilitates freight transport between China, Europe - Ministry
Jan.-Apr. 2021: Georgian wine export up 15%
Demand for domestic tourism on the rise in Kazakhstan
Some 300 applicants register for Presidential elections in İran
Turkey’s 87 tech zones exports reach $5.8 billion
China's probe lands on Mars
Kazakhstan keen to cooperate with Spain in water resources management
Number of active U.S. drilling rigs increases this week
Cuba reports record number of daily COVID-19 cases
Japanese lawyer implores Tokyo to cancel Olympics, 350,000 sign petition
Romania to ease COVID-19 restrictions from Saturday
U.S. city Columbus agrees to pay 10 mln USD to family of unarmed black man killed by police
3 rockets fired from Syria toward Israel
Indonesia reports 2,633 new COVID-19 cases, 107 new deaths
Turkey reports over 14 400 COVID-19 cases)
New project 'Log in Georgia' to give access to high-speed internet to people in rural areas
Head of Kazakhstan holds meeting with World Bank Vice President for Europe and Central Asia
Lithuanian company launches innovative complex solution in Azerbaijan's financial sector
5.2 mln Ethiopians in restive northern region need food aid - UN
Improved coronavirus conditions lead to further relaxation of restrictions in Cyprus
Israel's annual inflation up 0.8 pct, highest in nearly 2 years
Chairs of Azerbaijani Parliament, Turkish National Assembly talk issues of mutual interest
All news