Houston-based Enterprise Products Partners (NYSE: EPD) is facing complaints from several oil businesses, claiming the company is trying to dominate the exporting of US oil.
Enterprise recently overcame a decade-old legal ban on exporting oil to other countries, becoming the envy of the energy industry. BP, PLC (NYSE: BP) and others filed a complaint with the US Federal Trade Commission (FTC), which is currently performing an investigation into the matter.
BP, Enterprise, and the FTC all declined to comment on the issue, but industry insiders say it’s from Enterprise’s recent purchase of a competitor. The company merged with Oiltanking Partners (NYSE:OILT), a pipeline and logistics firm back in November.
The deal, worth $5.9 billion, gave Enterprise control of the single-largest oil storage operation on the Gulf Coast. Now, companies using the terminals on the Houston Ship Channel complain that Enterprise started charging a per-barrel loading fee that raises their cost of exports compared to Enterprise shipments.
As an exporter, Enterprise is in direct conflict with logistics clients. According to an executive at a company questioned by the FTC, “It prices us out of competition relative to them.”
Although there are other oil terminals and docks on the Gulf Coast, space is very limited due to the rapid growth in domestic oil production. As a result, Oiltanking customers are not left with many alternatives.
Enterprise tells the Wall Street Journal it is honoring all existing Oiltanking contracts, but some agreements are for oil storage only and not dock services. If a customer wants to export, they can amend their contracts and pay market-based rates, according to Enterprise.
Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals.