Blackstone and Canadian pension funds to buy into LNG Canada, drawing environmental criticism
Pension funds and Blackstone are paying US$3.1 billion for a stake in the Kitimat terminal as the expansion moves ahead, and critics say retirement savings are at risk.
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Blackstone, the U.S. private-equity firm, is leading a group of Canadian pension investors that will spend US$3.1 billion to buy 49.9 per cent of Mitsubishi Corp.'s subsidiary holding its 15 per cent stake in LNG Canada, the Kitimat export terminal. Alongside Blackstone Credit & Insurance are the Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System Investment Management Corp. and Public Sector Investment Board. The stake Mitsubishi is selling carries an estimated value of US$1.6 billion.
Mitsubishi said the sale does not change its agreement with the project and that the new investors' resources will help advance the expansion. Its LNG Canada entitlement is 2.1 million tonnes a year, rising to 4.2 million tonnes after expansion.
The Phase 2 expansion, approved by the five joint-venture partners on Sept. 29, would lift the plant's capacity from 14 million tonnes a year to about 28 million tonnes, at a reported cost of $33 billion. LNG Canada's total investment is $40 billion, led by Shell, which holds 40 per cent. The joint-venture partners are Shell, Mitsubishi, Petronas, PetroChina and Korea Gas.
Geoff Souter, managing director at CPP Investments, called LNG Canada "a high-quality, globally strategic asset" and said the fund saw "a compelling opportunity to invest at scale in Canada." Rick Campbell of Blackstone Credit & Insurance called it "one of Canada's most significant energy projects."
Climate advocates say the deal puts retirement savings at risk.
