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Enbridge Eyes $6.4 Billion In Asset Sale Income

Enbridge plans to divest assets worth US$6.4 billion (C$8 billion) this year, which is more than double the company’s initial divestment plan for the period, sources told the Globe and Mail, asking to remain anonymous because the plans are still private.

Last November, the country’s top pipeline operator announced that it would divest some US$2.4 billion (C$3 billion) in non-core assets under pressure from shareholders and rating agencies to do something about its debt.

Enbridge will now likely try to use improved appetite for oil assets resulting from the recent positive price developments to shrink its US$49.2-billion (C$61.4-billion) long-term debt pile, part of which it accumulated because of its merger with Spectra Energy.

The company last year identified non-core assets worth US$8 billion (C$10 billion) that it could sell to reduce its debt load. Among these are US$1.6 billion (C$2 billion) worth of renewable energy assets and some US$3.2 billion (C$4 billion) worth of midstream operations.

The renewable energy assets have already attracted the interest of private equity investors looking to benefit from the low-interest rate environment while it lasts.

Like other pipeline operators, Enbridge has had its fair share of problems with opposition to new projects, specifically its proposed replacement of the Line 3 pipeline that carries crude from Hardisty, Alberta, to Superior, Wisconsin.

Last year, the Minnesota Commerce Department dealt a blow to the company by saying the the environmental and socioeconomic risks of the Line 3 replacement project exceeded its potential benefits, adding that Enbridge had not made a sound case about the need for a new pipeline. The final decision on Line 3, however, lies with the state’s Public Utility Commission.

Enbridge was luckier with another pipeline, though: the U.S. State Department gave it the green light to expand the capacity of Line 67 that carries oil from Edmonton to Superior from 450,000 bpd to 890,000 bpd.

By Irina Slav for Oilprice.com

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