US Investor Dollars Beckon Foreign MLPs

“The difference is we’re more diverse. We’re in multiple geographies, in hub locations where in any price environment, there is a huge amount of product flow. Our business model is based on supply-demand imbalances from one region to another,” Abbott said.

He also noted that with its geographic diversity, VTTI can fill needs as they emerge in Europe and the Middle East.

“That’s very different from North America, where growth is driven by interest in unconventional oil and gas. Their business model is more core to the oil prices. If oil prices drop, investment in upstream drops and at some point in the future, the price on products will also be reduced,” he said. “For us, that’s not the case.”

When VTTI initially climbed into the U.S. market, oil prices were near the $100 per barrel level, and given the health of upstream investment, it would’ve been hard to show a need for diversity, Abbott said.

However, with falling rig rates, the distinction is very clear – and it can motivate U.S. investors.

“It means our business model will insulate VTTI from oil price [instability], whereas in North America, that’s not the case,” he said.


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