Monday, April 27, 2009

Enterprise Products and TEPPCO abandon Texas Offshore Oil Port project

HOUSTON, Texas - Enterprise GP Holdings L.P., announced on April 21 that its subsidiaries, Enterprise Products Partners L.P. and TEPPCO Partners, L.P. have exited their involvement in the Texas Offshore Port System (TOPS) partnership effective April 16. In so doing, they forfeited their investments and combined two-thirds ownership interest in the partnership.
In August 2008, affiliates of Enterprise, TEPPCO and Oiltanking Holding Americas, Inc. formed the TOPS partnership to design, construct, operate and own a Texas offshore crude oil port and pipeline system that would facilitate delivery of waterborne crude oil cargoes to refining centers located along the upper Texas Gulf Coast. The total cost of the project had been estimated at $1.8 billion, with each partner putting up $600 million.
Enterprise, TEPPCO and Oiltanking each owned, through their respective subsidiaries, a one-third interest in the joint venture.
The decision to dissociate from TOPS was the result of a disagreement with the Oiltanking partner, parent company Enterprise GP Holdings LP said in a news release.
Oiltanking has alleged in a response to the notices of dissociation that the dissociation of the affiliates of Enterprise and TEPPCO was wrongful and in breach of the TOPS partnership agreement.
As a result of the withdrawal of Enterprise and TEPPCO, consolidated net income for the parent company is expected to reflect a non-cash charge of approximately $68 million for the second quarter of 2009. The estimated loss represents the consolidated equity that Enterprise and TEPPCO held in the TOPS partnership on April 16, which primarily reflects capital contributions for construction in progress.
The TOPS project is in the preliminary stages of development. Major construction activities have not yet begun.

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