NEW YORK (Reuters) – 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. The pandemic has ended a boom in U.S. shale production which had prompted a rapid expansion in the capacity of the largest energy pipeline network in the world to carry all the oil from fields to processing centers and onto refineries and export terminals. Now, pipeline companies may see their revenues plunge as much as 50% on some lines this year, analysts said, because oil companies have cut production to match the fall in demand caused by the impact of coronavirus on travel. Output may never recover to pre-pandemic levels, according to a Dallas Federal Reserve Bank survey released last week. Pipeline companies make most of their money from long-term contracts with producers and refiners that guarantee payment even if users don’t ship the oil. Rather than forcing producers to continue paying during the downturn, and to preserve long-standing relationships with them, pipeline companies such as Enterprise Product Partners EPD.N, Energy Transfer ET.N and Magellan Midstream Partners MMP.N have offered customers sweeter terms under existing contracts and reduced rates when… continue reading
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Source: CTRM Center