Saturday, October 19, 2019

Port of Corpus Christi gets PEU'd by Carlyle

Last year The Carlyle Group announced it would develop a new oil export terminal for the Port of Corpus Christi.  Carlyle's website stated:

Under the terms of the Agreement, the Port will work exclusively with Carlyle to bring together world-class oil producers, marketers, pipeline operators and marine terminal operators to ensure a significant portion of the new oil production in Texas will have a reliable gateway to international markets. As part of the Agreement, Carlyle agreed to lead the construction and ongoing operations of the Terminal on an exclusive basis. Carlyle also agreed that it would arrange for a private funding solution for a dredging project to bring fully-laden VLCCs to Harbor Island (at least a 75-foot main channel depth).

The Terminal is expected to be operational in late 2020. Carlyle’s equity for this investment will come from its Global Infrastructure Fund
Reuter's reported that Carlyle is out of the Corpus Christi project, as did the Corpus Christi Caller Times and KRIS TV.  Carlyle's joint venture signed a fifty year lease with the Port in March.

The Port of Corpus Christi Port Commission met on October 15 and the board packet made no mention of The Carlyle Group.  The agenda had the following item for Lone Star Ports, the joint venture between Carlyle and The Berry Group:

Receive legal advice from PCCA's counsel in connection with Lease Agreement between the PCCA and Lone Star Ports, LLC
That was in executive session. The Port's September commission packet had this agenda item for Lone Star Ports (before Carlyle officially pulled out).

10h. Professional Engineering Services Contract with Schneider Electric: Staff recommended approval, in the form presented to the meeting, of a Professional Engineering Services Contract with Schneider Electric in an amount not to exceed $251,502 to provide the engineering services necessary to assess facts and optimal power choices to meet Lone Star Ports’ project schedule, cost, resilience, and sustainability options at Harbor Island.
Schneider Electric and The Carlyle Group announced a partnership/joint venture in April:

Global investment firm, The Carlyle Group (NASDAQ: CG) and Schneider Electric SE (EPA: SU), the leader in the digital transformation of energy management and automation, today announced the enhancement of their partnership to develop new and innovative infrastructure projects. 

In addition to creating new investment and energy-as-a-service opportunities, this collaboration will apply Schneider Electric’s capabilities in advanced connectivity and real-time insights to current and future Carlyle infrastructure and microgrid investments. In a market which faced sustained underinvestment in critical infrastructure due to funding constraints, the new partnership will offer innovative and efficient solutions meeting the needs of a rapidly changing energy landscape. 

The Carlyle Group recently announced several large infrastructure projects, including the JFK Airport Terminal One Redevelopment, Munich Airport Joint Venture (Reach Airports) and Lone Star Ports Harbor Island Crude Export Terminal, which are expected to benefit from this partnership and Schneider’s breadth of technology-enabled products, solutions and services. 

The new partnership also entails the formation of a joint venture, named AlphaStruxure to drive from the design and engineering phase the development of smarter infrastructure projects and more reliable distributed energy and microgrid networks.  
Carlyle cut its teeth on government contractors, has connections to leverage Uncle Sam's checkbook and learned long ago to layer businesses.  It also knows how to contain responsibility and liability, which makes it easier to abandon a project once profits aren't big enough or public opposition gets too great.  The Carlyle Group embodies greed and leverage.  They pulled out when they couldn't get enough of either.

Corpus isn't alone in Carlyle abandoning a project they'd started. Boise, Idaho had a similar experience with its tank farm project.

Update 10-30-19:  Hellenic Shipping News reported "Carlyle quit the venture without providing a reason.  Ferris Hussein, a Carlyle managing director, declined to comment on the reason for its withdrawal.