The Port of Corpus Christi needs to secure an alternative source of financing to move forward with its joint venture oil export terminal, one industry expert said.
CEO Sean Strawbridge said in an email that Lone Star Ports LLC still intends to proceed with the Harbor Island terminal's development after the Carlyle Group LP recently exited its position, leaving Berry Contracting LP to fund construction on its own. Carlyle planned to invest $400 million in widening and deepening the Corpus Christi channel to accommodate very large crude carriers, or VLCCs.
"Given the commitment required to finance private dredging of a deepwater channel ... the [Port of Corpus Christi] has to come up with a similarly deep-pocketed replacement private investor to continue," Morningstar's director of oil and products research Sandy Fielden said in an email.
The uncertainty surrounding the federal government's share of the dredging is particularly challenging for finding a new partner, he added. The Port of Corpus Christi has been working on a project with the U.S. Army Corps of Engineers to deepen the Corpus Christi channel to 54 feet by 2021, but Congress has not fully funded the venture's federal share. Lone Star Ports has to wait until at least then to dredge from 54 feet to 75 feet, a depth that will enable the full loading of VLCCs.
"The Port of Corpus Christi is not in the business of providing capital to an industry player without an intermediary who can provide a solution that the industry player can't," Carlyle managing director Ferris Hussein said about the joint venture in March.
Strawbridge, meanwhile, called the Army Corps of Engineers "one of the most underfunded and unwieldy agencies in the federal government."
Other projects underway near Corpus Christi, meanwhile, are vying for a first-mover advantage as analysts expect only a handful of new VLCC-capable facilities will be needed on the Gulf Coast for meeting demand over the next five years. Both Trafigura Pte. Ltd. and Phillips 66 have filed applications with the U.S. Department of Transportation's Maritime Administration to build offshore crude export terminals.