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The Canadian government is considering the sale of a stake in the troubled Trans Mountain pipeline project to Indigenous communities.
Per a report by Bloomberg, which cited documents from the office of Deputy PM Chrystia Freeland, Ottawa is prepared to fund the sale itself so the communities don’t risk their own money.
The news breaks days after Reuters reported that the federal government in Canada had guaranteed some $2.2 billion worth of new loans for the expansion projects, which have encountered cost overruns and delays due to strong environmentalist and political opposition.
Fierce opposition in British Columbia eventually forced Kinder Morgan, the project operator, to reconsider its commitment to expand the Trans Mountain pipeline, which would increase the daily capacity of the pipeline to 890,000 barrels per day from 300,000 bpd.
Back in 2018, the government of Canada reached an agreement with Kinder Morgan to buy the Trans Mountain expansion project and related pipeline and terminal assets.
Over the past few years, the price tag for the expansion project has ballooned from an initial C$7.4 billion, or $5.5 billion, to some C$30.9 billion, equal to around $23 billion. The guarantees come a year after Ottawa guaranteed C$10 billion in loans for the project, equal to some $7 billion.
Yet although the government took the Trans Mountain project off Kinder Morgan’s hands, it never intended to be the permanent owner of the project. Reports about indigenous stakeholding are not new but so far this has not translated into actions.
Now, per the documents cited by Bloomberg, the federal government plans to set up a special investment vehicle for the stake purchase, with the possibility for the vehicle to be used more than once for further stake purchases.
Some Canadian oil companies are making higher production plans in anticipation of the pipeline expansion already, even though most of their oil will likely continue going south instead of west to Asia.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.