U.S. pipeline companies hit by weak demand offer enticements to keep shippers

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U.S. pipeline companies are sweetening terms in a competition to keep producers using their lines as the industry downturn caused by the coronavirus pandemic means there is less oil to transport.

have offered customers sweeter terms under existing contracts and reduced rates when those contracts are renegotiated.

Magellan went further than rivals and said this month it offered customers the option to ship oil on its pipeline only when market conditions support it. Magellan’s revenue from crude transportation and terminals fell 16.5% in the second quarter from a year earlier. Magellan expects few spot shipments on big lines that flow out of the Permian basin in Texas and New Mexico, the biggest oilfield in the United States. Spot shipments usually account for about 10% of total volumes.

Enterprise abandoned a major 450,000-bpd Permian crude pipeline project in Texas this month, one of numerous projects on hold due to the slump in demand, and said it amended agreements with shippers to allow reduction of near-term volume commitments in exchange for extending the term of the contract.

 

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