Carlyle agrees to terminal project amid rising US crude exports

The Carlyle Group has agreed to build a land-based oil export terminal on Harbor Island, off the coast of Texas in partnership with the Port of Corpus Christi Authority.

The Washington DC-based private equity firm will have full ownership of the terminal, which Ferris Hussein, a managing director for the firm’s infrastructure group, said will cost around $1 billion. The port authority will receive a portion of the terminal’s revenue and rent for the land it occupies, Hussein told Infrastructure Investor.

The firm will finance the investment through its Global Infrastructure Opportunity Fund, a closed-ended vehicle Carlyle is in the process of raising with a target of $2.5 billion. Hussein declined to disclose further financial details or comment on the firm’s fundraising, citing regulatory restrictions.

The terminal will be only the second in the US able to accommodate Very Large Crude Carriers, a classification of cargo ships that can hold up to two million barrels of oil. The only other terminal in the US able to handle VLCCs is an offshore facility near Louisiana.

Under the terms of the agreement, Carlyle will also develop: a dredge of at least 75 feet, required by these cargo ships; at least two loading docks on Harbor Island; and a crude oil tank storage inland across Redfish Bay on land secured by Carlyle, according to a statement.

The firm invests in oil and natural gas exploration and drilling around the world, and also owns a number of power generation assets in the US. According to Hussein, Carlyle has a growing interest in the midstream sector, part of its infrastructure strategy, as US oil production continues to rise.

Developing an export terminal that can handle large ships is especially prudent after the US lifted a longtime crude oil export ban in 2015, Hussein said. “Every material oil exporter strives to provide VLCC access. It’s the most efficient way to market,” he added.

The Global Infrastructure Opportunity Fund will deploy up to 70 percent of its equity in the US, with the rest to be spent elsewhere in North America, Europe and Asia. The fund has a five-year investment period and, in addition to midstream, will focus on energy and power smart grid infrastructure, airports and water opportunities. Carlyle reportedly held a $600 million first close for the fund last October.