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BP considers MLP for pipeline assets

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World Pipelines,

The oil major is evaluating an initial public offering of an MLP that could include crude oil, natural gas and refined petroleum product pipelines in the Midwest and Gulf Coast. The company said it could begin the regulatory process to form BP Midstream Partners by the end of the year.

The potential IPO would structure the assets as a master-limited partnership, a frequently used corporate structure for pipeline companies.

Master limited partnerships (MLPs) provide energy infrastructure builders with access to cheap capital and pay out steady dividends to their investors. BP would own the general partner of the MLP, as well as its incentive distribution rights and a majority of its limited partner interests, the company said.


BP said forming an MLP is just one of the options it is considering in its bid to create more value for its shareholders and grow its pipeline business.

The plan, first considered about five years ago, was shelved when oil prices declined sharply in 2014.

Last year, BP approached Enbridge in an effort to sell some of BP's offshore Gulf of Mexico pipeline network, known as the Mardi Gras Transportation System, without success.

Royal Dutch Shell held a public offering of its midstream assets in June, 2014, raising nearly US$ 1 billion (£770 million) to pay down debt, just before oil prices collapsed.

Shell was the first oil major to use this structure to generate cash from its assets.

Independent refiners like Valero Energy, Tesoro, and Marathon Petroleum have previously formed master-limited partnerships for their pipeline assets and independent pipeline companies often use this corporate structure.

If successful, the deal would be one of the largest IPO offerings of the year.

The proposed spinoff would be called BP Midstream Partners.

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