The Canadian government has agreed to buy the Trans Mountain pipeline, a critical oil transport route, from Kinder Morgan for C$4.5bn, in an attempt to increase export capacity for the country’s heavy crude.
The radical move is an attempt by the government to make progress with a proposed C$7.4bn expansion of the Trans Mountain pipeline, which runs from the oil sands region of Alberta to a terminal near Vancouver on Canada’s west coast.
Kinder Morgan, the US pipeline group, had been attempting to increase Trans Mountain’s capacity from 300,000 barrels a day to 890,000 b/d, but had faced strong opposition from British Columbia, the province where the pipeline ends. The federal government and the province of Alberta, which produces the oil carried by Trans Mountain, are strong supporters of the expansion project, and the disagreement had led to increasingly acrimonious political and legal disputes.
Kinder Morgan had set a deadline of May 31 for a resolution of the uncertainty over whether the expansion would be allowed to go ahead.
Steve Kean, Kinder Morgan’s chief executive, said he was pleased that the company and the government “were able to reach agreement on a transaction that benefits the people of Canada”, oil exporters and shareholders.
He added: “The outcome reached represents the best opportunity to complete TMEP [Trans Mountain Expansion Project] and thereby realize the great economic benefits promised by that project.”
Source: FT.com
