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US-based petroleum refiner Phillips 66 has made an offer to acquire the public units of natural gas company DCP Midstream to boost its natural gas liquids business.

Phillips 66 is proposing $34.75 for each of DCP Midstream’s outstanding publicly-held common units as part of the transaction.

A potential deal would value the pipeline operator at $7.2bn, reported Reuters.

The latest move follows an agreement signed by Phillips 66 with Canadian pipeline operator Enbridge to merge their indirect ownership interests in Gray Oak, as well as DCP Midstream, in a single joint venture.

Under the deal, Phillips 66 increased its stake in DCP Midstream to 43.3%, from 28.3%, as well as reduced its stake in the Gray Oak Pipeline to 6.5%, from 42.3%.

This will result in Enbridge reducing its indirect interest in DCP from 28.3% to 13.2%.

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Phillips 66 said it will make a $400m cash payment to Enbridge as part of the transaction.

Enbridge has also agreed to increase its indirect interest in the Gray Oak pipeline from 22.8% to 58.5% and will serve as the operator.

The Grey Oak pipeline transports crude oil to the Gulf Coast from West Texas, US.

Enbridge president and CEO Al Monaco said: “We’re pleased to have reached this new arrangement with P66 to optimise the combined assets and drive operational and financial synergies from both assets.

“It’s another example of our continued focus on optimising our portfolio and surfacing value for our shareholders while further building out our already strong US Gulf Coast export position. We look forward to continuing our strong partnership with P66.”