Sunoco, Royal Dutch Unit Ink Deal


Energy pipelines and terminals operator, Sunoco Logistics Partners LP (SXL) has inked a long-term deal with Shell Trading US Company (:STUSCO), an affiliate of European energy major Royal Dutch Shell plc (RDS.A). Per the deal, STUSCO will become an anchor customer of the Mariner South project of Sunoco.

Management reveals that in order to build high-standard export and import facilities of liquefied petroleum gases (:LPG) in the Gulf Coast of U.S., the Mariner project will unite Mont Belvieu-based storage and fractionation terminals of Lone Star NGL LLC with the pipeline facilities of Sunoco, that run from Mont Belvieu, Texas to Nederland, Texas. Lone Star is a joint venture between natural gas pipeline operator, Energy Transfer Partners LP (ETP) and natural gas service provider, Regency Energy Partners LP (RGP).  

The Mariner South project is expected to have a capacity to transport 6 million barrels of LPG per month initially. The project is expected to be online by the first quarter of 2015.

Philadelphia-based Sunoco, a master limited partnership (MLP), acquires, owns, and operates a geographically diverse portfolio of refined products and crude oil pipelines and terminal facilities. Sunoco Logistics is organized into four segments – Refined Products Pipeline System, Terminal Facilities, Crude Oil Pipeline System, and Crude Oil Acquisition and Marketing.

Sunoco currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.    

With low-risk and stable cash flow-generating energy infrastructure assets, Sunoco offers investors an opportunity to capture income growth through steadily-rising cash distributions and capital appreciation.

However, unfavorable regulatory changes by the Federal Energy Regulatory Commission (:FERC) would impact the partnership’s results.

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