Canada commits to backing C$3 billion in new Trans Mountain oil pipeline loans
Story by By Ismail Shakil and Nia Williams • Yesterday
A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops
Story by By Ismail Shakil and Nia Williams • Yesterday
A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops
© Thomson Reuters
OTTAWA (Reuters) -The Canadian government is backing up to C$3 billion ($2.24 billion) in loans for Trans Mountain Corp (TMC), the crown corporation building an over-budget and long-delayed oil pipeline expansion to Canada's Pacific Coast.
The information was disclosed on Export Development Canada's (EDC) website this week, and shows two new loan guarantees signed in late March and early May.
Last year Liberal Prime Minister Justin Trudeau's government, which bought the Trans Mountain pipeline in 2018 to ensure the expansion project got built, provided a C$10 billion loan guarantee to TMC.
The Trans Mountain Expansion will nearly triple the flow of crude from Alberta's oil sands to Burnaby, British Columbia, to 890,000 barrels per day and is intended to boost access to Asian refining markets.
But the project has been beset by regulatory hurdles, environmental opposition and construction delays and is now expected to cost C$30.9 billion, quadrupling from the C$7.4 billion budgeted in 2017.
Finance Ministry spokeswoman Marie-France Faucher said the loan guarantee was "common practice" and did not reflect any new public spending. TMC is paying a fee to the government for the loan guarantee, she said.
"The federal government does not intend to be the long-term owner of the project and will launch a divestment process in due course," Faucher said in a statement, adding the project remains commercially viable.
Many analysts say TMC will not be able to recoup the full cost of construction when it sells the pipeline. Morningstar analyst Stephen Ellis estimated the pipeline will be worth around C$15 billion once it is completed.
"With the project so over-budget, the feds are going to have to sell it at a loss and taxpayers will be on the hook to repay the loans," said Keith Stewart, a senior energy strategist with Greenpeace Canada.
The expanded pipeline is expected to start shipping oil in the first quarter of 2024.
($1 = 1.3372 Canadian dollars)
(Reporting by Ismail Shakil and Nia Williams; Editing by Daniel Wallis and Richard Chang)
OTTAWA (Reuters) -The Canadian government is backing up to C$3 billion ($2.24 billion) in loans for Trans Mountain Corp (TMC), the crown corporation building an over-budget and long-delayed oil pipeline expansion to Canada's Pacific Coast.
The information was disclosed on Export Development Canada's (EDC) website this week, and shows two new loan guarantees signed in late March and early May.
Last year Liberal Prime Minister Justin Trudeau's government, which bought the Trans Mountain pipeline in 2018 to ensure the expansion project got built, provided a C$10 billion loan guarantee to TMC.
The Trans Mountain Expansion will nearly triple the flow of crude from Alberta's oil sands to Burnaby, British Columbia, to 890,000 barrels per day and is intended to boost access to Asian refining markets.
But the project has been beset by regulatory hurdles, environmental opposition and construction delays and is now expected to cost C$30.9 billion, quadrupling from the C$7.4 billion budgeted in 2017.
Finance Ministry spokeswoman Marie-France Faucher said the loan guarantee was "common practice" and did not reflect any new public spending. TMC is paying a fee to the government for the loan guarantee, she said.
"The federal government does not intend to be the long-term owner of the project and will launch a divestment process in due course," Faucher said in a statement, adding the project remains commercially viable.
Many analysts say TMC will not be able to recoup the full cost of construction when it sells the pipeline. Morningstar analyst Stephen Ellis estimated the pipeline will be worth around C$15 billion once it is completed.
"With the project so over-budget, the feds are going to have to sell it at a loss and taxpayers will be on the hook to repay the loans," said Keith Stewart, a senior energy strategist with Greenpeace Canada.
The expanded pipeline is expected to start shipping oil in the first quarter of 2024.
($1 = 1.3372 Canadian dollars)
(Reporting by Ismail Shakil and Nia Williams; Editing by Daniel Wallis and Richard Chang)
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