Blackstone funds and Canadian institutional investors have teamed up to buy a stake in the LNG Canada export project for a total of $3.1 billion, the asset manager said on Monday.
Funds managed by Blackstone Credit & Insurance, in partnership with leading Canadian institutional investors, have agreed to buy a 49.9% non-controlling stake in a unit of Mitsubishi Corporation that holds the Japanese firm’s 15% stake in LNG Canada.
The Canadian institutional investors include Canada Pension Plan Investment Board (CPP Investments), through wholly owned subsidiaries of CPPIB Credit Investments Inc., Ontario Municipal Employees Retirement System, (OMERS), the Investment Management Corporation of Ontario (IMCO), and The Public Sector Pension Investment Board (PSP Investments).
The transaction to buy into the first Canadian LNG project comes weeks after its shareholders announced the final investment decision to proceed with Phase 2 of the plant in Kitimat, British Columbia. The next phase will double the LNG liquefaction capacity of the Shell-led project in the early 2030s.
Shell, the world’s biggest LNG trader, holds a 40% interest in LNG Canada and will receive nearly 6 mtpa of additional LNG from the expansion.
Mitsubishi, whose stake will be diluted with the entry of Blackstone and the Canadian institutional investors, said the transaction would not affect its LNG offtake volumes or customers. Mitsubishi Corporation “will welcome the Funds as a financial partner in the Holdco while maintaining its participation across the natural gas and LNG value chain in Canada,” the Japanese firm said.
LNG Canada Phase 2 was actually the first on the list of five major projects of national importance, which Canadian Prime Minister Mark Carney proposed last year to diversify Canada’s energy exports from the United States and make it an energy superpower.
Phase 2 of the first Canadian LNG export facility is planned to add two LNG processing units, or trains, increasing LNG Canada’s total production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa.
The project in Kitimat is positioned to supply cost-competitive gas to Asian markets, where demand for LNG is expected to increase significantly, Shell said at the end of September.
By Tsvetana Paraskova for Oilprice.com