Ground freight and logistics company FTAI Infrastructure announced on Thursday that its subsidiary, Jefferson Energy, signed a multi-year agreement with Aramco Trading Americas, the energy trading arm of Saudi Aramco. This agreement will significantly increase the crude oil supply reaching Jefferson Energy's Main Terminal located in Beaumont, Texas.
The deal involves incorporating bi-directional flow capability into Jefferson Energy's Southern Star Pipeline. Currently, this pipeline transports crude oil from the Main Terminal to the Motiva Port Neches Terminal. The modification will allow the pipeline to receive oil from the TC Energy Marketlink Pipeline System, a major pipeline transporting 750, 000 barrels of crude oil daily from Cushing, Oklahoma, to the U. S. Gulf Coast.
FTAI CEO Ken Nicholson expressed his enthusiasm about the collaboration, highlighting the ability to provide Aramco Trading Americas with a customized package of terminal services. "We are particularly looking forward to the enhanced service optionality that will be opened up by bi-directional flow on the Jefferson Southern Star Pipeline, " Nicholson said. "This important project will enable Jefferson Energy's Main Terminal customers to access an additional major pipeline system for light crude, along with Jefferson Energy's established connectivity to Delek's Paline Pipeline. "
The agreement comes at a time when the global energy market is experiencing significant volatility. Geopolitical tensions and post-pandemic supply chain disruptions have contributed to rising oil prices. This deal is likely to play a role in bolstering the supply of crude oil to the U. S. Gulf Coast, a vital hub for oil refining and distribution in the United States.
Analysts believe that the increased access to light crude oil from Cushing, Oklahoma, provided by the bi-directional flow capability of the Southern Star Pipeline, will be particularly beneficial for Aramco Trading Americas. Light crude oil, also known as sweet crude, is a more desirable type of crude oil due to its lower sulfur content and easier refining process.
The Aramco-FTAI Infrastructure agreement is expected to have a positive impact on both companies. FTAI Infrastructure will benefit from the increased throughput at its Jefferson Energy terminal, while Aramco Trading Americas will gain access to a wider range of crude oil sources and a more efficient transportation system for its products. The deal is also likely to benefit the wider U. S. energy sector by contributing to the stability of crude oil supplies.