Teekay Offshore Partners L.P. has entered into new long-term contracts with a group of companies that includes Chevron Canada, Husky Energy, Mosbacher Operating Ltd., Murphy Oil, Nalcor Energy, Statoil and Suncor Energy to provide shuttle tanker services for their East Coast Canada oil production.
These 15-year contracts, plus extension options, will initially be serviced by one of Teekay Offshore’s existing shuttle tankers, the Navion Hispania, and two to three third party-owned shuttle tankers currently operating in East Coast Canada, which will be chartered-in to Teekay Offshore’s Canadian affiliate located in St. John’s, Newfoundland, prior to the delivery of up to four shuttle tanker newbuildings.
Teekay Offshore will enter into shipbuilding contracts to construct three Suezmax-size, DP2 shuttle tanker newbuildings with a South Korean shipyard for a fully built-up cost of approximately $365 million, with an option to order one additional vessel should a fourth vessel be required. Teekay says that the three firm vessels are expected to be delivered in the fourth quarter of 2017 through the first half of 2018.
According to the press release, the Partnership intends to initially finance the installment payments for the shuttle tanker newbuildings with a portion of its existing liquidity and it expects to secure long-term debt financing for the vessels prior to their scheduled deliveries.
“These new, strategic long-term shuttle tanker contracts mark Teekay Offshore’s entrance into the growing Eastern Canada offshore oil production market, which is a focal point for Canadian oil and gas development,” commented Peter Evensen, Chief Executive Officer of Teekay Offshore GP LLC.
Evensen continued, “Teekay Offshore now has a leading market position in all three DP shuttle tanker basins, including the North Sea, Brazil and now the East Coast of Canada. I am pleased that we continue to secure new, accretive growth in our Offshore Logistics business, which increases the Partnership’s growth pipeline to $3.7 billion of capital projects and extends our growth into late-2017 and 2018.”