HOUSTON, March 6, 2013 /PRNewswire/ -- Oiltanking Partners, L.P. (NYSE: OILT) (the "Partnership") today announced an expansion of the Partnership's relationship with Enterprise Products Partners, L.P. ("Enterprise") and plans to significantly increase its ability to import/export liquefied petroleum gas ("LPG") at its terminal on the Houston Ship Channel. In connection with the agreement with Enterprise, which runs through 2026, the Partnership will construct a new vessel dock and add infrastructure to existing docks with the capability of handling significantly more LPG vessels at multiple docks. The $44 million expansion is expected to be completed by the end of the fourth quarter of 2014.
"Oiltanking has enjoyed a successful relationship with Enterprise at our Houston terminal for over 20 years," said Anne-Marie Ainsworth, President and Chief Executive Officer of the Partnership's general partner. "Since the inception of the relationship, both parties have kept pace with import/export demand by continuing to add the necessary infrastructure to become the preferred LPG import/export facility throughout the Gulf Coast.
"In conjunction with Enterprise's most recent expansion at our facility, the loading capacity for low-ethane propane will increase from the current rate of almost 4 million barrels per month to approximately 7.5 million barrels per month. This dock expansion project will provide incremental loading capacity and position us well to capitalize on the robust international demand for LPGs," added Ainsworth.
Under the amended agreement, Oiltanking has agreed to provide vessel-based LPG import and export services on the Houston Ship Channel exclusively to Enterprise, and Enterprise has agreed to exclusively use Oiltanking's facility for its vessel-based imports and exports of LPGs on the Houston Ship Channel.The dock expansion project and amended agreement is expected to be accretive to distributable cash flow once operational and is expected to generate returns of approximately 5-6 times EBITDA, or earnings before interest, taxes and depreciation, with upside potential. The Partnership anticipates funding the project primarily with debt.