Sources said
It tries to raise interest rates on its piping system contract
South Bow sees marketing division EBITDA falls $30 million in 2025
HOSTON, April 11 (Reuters) – Calgary-based pipeline company Nangong has cut the size of its crude oil trading team as it attempts to increase the amount of oil sold on contracts and reduce the extent of its transactions through its pipeline system.
South Bow broke away from Canadian pipeline company TC Energy in October 2024 as part of a plan to help TC reduce its debt burden.
The people said Nangong resigned as two traders on April 4. TC Energy has cut members of the team in June before the spinoff. The latest layoffs have lowered the crude oil trading team from five to two.
A South Bow spokesman declined to comment on the staff matters of the story.
Sources said the company is seeking more stable revenue through the volume of contracts shipped through the pipeline system, after fewer trading opportunities after the launch of the Trans Mountain Pipeline in Canada.
South Bow expects EBITDA in the marketing division, including its crude oil trading team, to turn negative in 2025, down $30 million from $12 million in 2024.
However, it expects the company’s normal situation to be about $1.01 billion, compared to $1.09 billion in 2024.
The marketing department expects the loss in part because Canada’s highly anticipated transmount pipeline expansion has begun operations.
Trans Mountain Pipeline conducts a rough export from Alberta to Canada’s Pacific Coast. CEO Bevin Wirzba explained on a March investor call that the pipeline is expected to seize arbitrage opportunities from South Bow.
In its quarterly earnings report, the company said marketing revenue this year will also make Canada’s overall pipeline capacity and uncertainty about potential tariffs.
South Bow expects to secure 90% of its EBITDA through committed arrangements in 2025.
“Through the contract strategy, these EBITDAs should be worth more, given shareholder consistency,” Wirzba said on the investor call.
South Bow operates a 750,000 barrels per day market link pipeline system that extends through the Gulf Coast of the Keystone pipeline, sending crude oil from Cushing, Oklahoma, and Cushing, Oklahoma.
Sources told Reuters that the company will redistribute available spot capabilities on MarketLink, and the market link will use contract goods the team uses to increase to third-party customers.
South Bow shares were last traded at about $32.30, recovering some losses after South Bow closed the oil spill after it closed down to a five-month low, according to LSEG. (Reported by Georgina McCartney in Houston; Edited by Liz Hampton and Himani Sarkar)
