<PAGE>
 
EXH 10.5
                            LETTER AMENDMENT NO. 2


                              As of June 30, 1998



The Prudential Insurance Company
 of America
U.S. Private Placement Fund
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201

Ladies and Gentlemen:

          We refer to the Master Shelf Agreement dated as of April 17, 1997, as
amended by Letter Amendment No. 1 dated March 31, 1998 (as amended, the
"AGREEMENT"), among the undersigned, TransMontaigne Inc., formerly known as
TransMontaigne Oil Company, (the "COMPANY") and The Prudential Insurance Company
of America ("PRUDENTIAL") and U.S. Private Placement Fund (collectively, the
"PURCHASERS").  Unless otherwise defined herein, the terms defined in the
Agreement shall be used herein as therein defined.

          On April 17, 1997 the Company issued to the Purchasers $50,000,000
aggregate principal amount of its 7.85% Series A Senior Notes due April 17, 2003
and on December 16, 1997 the Company issued to Prudential $25,000,000 aggregate
principal amount of its 7.22% Series B Senior Notes due October 17, 2004.  The
Company has advised you that TransMontaigne Pipeline Inc. intends to make an
investment in West Shore Pipe Line Company, a Delaware corporation ("WEST
SHORE"), by purchasing 15.38% of the capital stock of West Shore for an
aggregate purchase price of $29,219,300 (the "WEST SHORE INVESTMENT") and also
that the Company intends to change the fiscal year of the Company and its
Subsidiaries from the year ending April 30, to the year ending June 30.  The
Company requests that you amend the Agreement to permit the West Shore
Investment and to provide for such change of fiscal year.  You have indicated
your willingness to so agree.  Accordingly, it is hereby agreed by you and us as
follows:
<PAGE>
 
          1.   AMENDMENTS.  The Agreement is, effective the date first above
written, hereby amended as follows:

               (a)  PARAGRAPH 5A. The second sentence of paragraph 5A of the
     Agreement is amended to read in its entirety as follows:

                    "On or before June 29, 1998, the fiscal year of the Company
and its Subsidiaries shall end on April 30 in each year and the fiscal quarters
of the Company and its Subsidiaries shall end on July 31, October 31, January 31
and April 30 in each year; from and after June 29, 1998, the fiscal year of the
Company and its Subsidiaries shall end on June 30 in each year and the fiscal
quarters of the Company and its Subsidiaries shall end on September 30, December
31, March 31 and June 30 in each year."

               (b)  PARAGRAPH 6A(2). Paragraph 6A(2) of the Agreement is amended
in full to read as follows:

                    "6A(2)  LEVERAGE RATIO. The Company will not permit the
Leverage Ratio of the Company and its Subsidiaries at any time during each
period specified below to equal or exceed the percentage set forth below next to
such period:

<TABLE>
<CAPTION>
                    Period                                     Percentage   
                    ------                                     ----------   
                    <S>                                        <C>           
                    To and including June 29, 2001                 65%      
                                                                            
                    From and including June 30, 2001               60%      
                    to and including June 29, 2002                          
                                                                            
                    June 30, 2002 and thereafter                   55%       
</TABLE>

               (c)  PARAGRAPH 6C(2). Clause (xv) of paragraph 6C(2) of the
Agreement is amended by substituting for the word "April" each time it appears
the word "June".

               (d)  PARAGRAPH 6C(4). Paragraph 6C(4) of the Agreement is amended
by renumbering paragraph 6C(4)(vii) to become 6C(4)(viii) and by inserting a new
paragraph 6C(4)(vii) reading in its entirety as follows:

                    "(vii)  The Investment of TransMontaigne Pipe Line Inc. in
15.38% of the capital stock of West Shore Pipe Line Company, a Delaware
corporation, for a purchase price not to exceed $29,500,000."

               (e)  SCHEDULE 5A(I). Schedule 5A(i) to the Agreement is amended
by amending the heading of section 8 thereof to refer to paragraph 6C4(viii).

                                       2
<PAGE>
 
          2.  CONSENT OF GUARANTORS.  Each Guarantor under the Guaranty
contained in paragraph 11 of the Agreement, hereby consents to this letter
amendment and hereby confirms and agrees that the Guaranty is, and shall
continue to be, in full force and effect and is hereby confirmed and ratified in
all respects except that, upon the effectiveness of, and on and after the date
of, said letter amendment, all references in the Guaranty to the Agreement,
"thereunder", "thereof", or words of like import referring to the Agreement
shall mean the Agreement as amended by said letter amendment.

          3.  CONSENT OF PLEDGORS.  Each of the Company and TransMontaigne
Transportation Services Inc. is a Pledgor under the Pledge Agreement (the
"PLEDGORS") and each hereby agrees that (i) the Pledge Agreement shall continue
to be, in full force and effect and is hereby confirmed and ratified in all
respects except that, upon the effectiveness of, and on and after the date of,
this letter amendment, all references in the Pledge Agreement to the Loan
Documents shall mean the Loan Documents as amended by this Amendment and (ii)
all of the Loan Security described therein does, and shall continue to, secure
the payment by the Pledgors of their obligations under the Loan Documents, as
amended by this letter amendment.

          4.  REPRESENTATIONS AND WARRANTIES.  In order to induce you to enter
into this Amendment, each of the Obligors hereby represents and warrants that
each of the representations and warranties contained in paragraph 8 of the
Agreement is true and correct on the date hereof.

          5.  MISCELLANEOUS.

              (a)  EFFECT ON AGREEMENT. On and after the effective date of this
letter amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", or words of like import referring to the Agreement, and
each reference in the Notes to "the Agreement", "thereunder", "thereof", or
words of like import referring to the Agreement, shall mean the Agreement as
amended by this letter amendment. The Agreement, as amended by this letter
amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed. The execution, delivery and effectiveness
of this letter amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy under the Agreement nor constitute a
waiver of any provision of the Agreement.

              (b)  COUNTERPARTS. This letter amendment may be executed in any
number of counterparts and by any combination of the parties hereto in separate
counterparts, each of which counterparts shall be an original and all of which
taken together shall constitute one and the same letter amendment.

                                       3
<PAGE>
 
              (c)  EFFECTIVENESS.  This letter amendment shall become effective
as of the date first above written when and if:

                   (I)   counterparts of this letter amendment shall have been
     executed by the Company, each Guarantor and the Pledgors and you;

                   (II)  the covenants of the Company set forth in the Bank
     Agreement shall have been amended to reflect the covenant modifications of
     the Agreement made herein; the Required Holders hereby consent to such
     amendments and waivers under the Bank Agreements;

                   (III) no Default or Event of Default under the Agreement
     shall have occurred and be continuing;

                   (IV)  the Bank Agent and other requisite holders, if any, of
     the Indebtedness issued under the Bank Agreement shall have consented to
     the amendments of the Agreement set forth herein; and

                   (V)   prior to the closing of the West Shore Investment, the
     Company shall have provided to the holder of Notes the certificate of a
     Financial Officer required by the last paragraph of paragraph 6C(4) of the
     Agreement.

              (d)  FEES. The Company agrees to pay Prudential $1,250 for the
     allocated costs of internal counsel for the preparation of this Amendment.

              (e)  GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
     IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
     LAW OF THE STATE 0F NEW YORK.

              If you agree to the terms and provisions hereof, please evidence
your agreement by executing and returning at least a counterpart of this letter
amendment to TransMontaigne Inc., 370 17th Street, Suite 2750, Denver, Colorado
80202, Attention of Harold R. Logan.

                         Very truly yours,

                         TRANSMONTAIGNE INC.
                         (f/k/a TransMontaigne Oil Company)



                         By:  /s/ Richard E. Gathright
                            -------------------------------              
                              Title:  President

                                       4
<PAGE>
 
                         GUARANTORS/PLEDGORS
                         TRANSMONTAIGNE PRODUCT SERVICES INC.   
                         TRANSMONTAIGNE PIPELINE INC.           
                         TRANSMONTAIGNE TERMINALING INC.        
                         TRANSMONTAIGNE TRANSPORTATION          
                          SERVICES INC.                          
                         BEAR PAW ENERGY INC.                    



                         By:  /s/ Richard E. Gathright
                            -----------------------------------
                             As C.E.O. of each of the foregoing
                             corporations



Agreed as of the date first above written:

THE PRUDENTIAL INSURANCE COMPANY
 OF AMERICA


By:  /s/ Randall M. Kob
   ------------------------- 
   Vice President


U.S. PRIVATE PLACEMENT FUND

By: Prudential Private Placement
    Investors, L.P., Investment Advisor

By: Prudential Private Placement
    Investors, Inc., its General Partner


By:  /s/  Randall M. Kob
   -------------------------              
   Vice President

                                       5