Canada likely to buy Trans Mountain pipeline project – Bloomberg

Canada is likely to buy Kinder MorganCanada Ltd's Trans Mountain oil pipeline and itsproposed expansion project in an attempt to ensure that it isbuilt, Bloomberg reported on Monday, citing a person familiarwith the talks.

The company, a unit of Houston-based Kinder Morgan Inc , had stopped all non-essential work on the C$7.4 billion ($5.70 billion) project in April, citing permitting delays andpolitical opposition in British Columbia, and said it wouldscrap the expansion unless the legal challenges are resolved byMay 31.

Expansion of the Trans Mountain pipeline, which takes crudefrom Alberta's oil sands to a facility in the Pacific provinceof British Columbia, has also faced opposition fromenvironmental groups and some aboriginal groups.

The minority left-leaning New Democratic government inBritish Columbia, citing the risks of a major spill, opposes theproject. This year it proposed new rules to temporarily blockincreased shipments of crude while it examined oil spillpreparedness and response.

Canada's finance minister, Bill Morneau, is expected toannounce on Tuesday whether or not the government plans tosupport the expansion of the pipeline expansion, the CanadianPress reported earlier on Monday. Bloomberg reported that the deal could be announced as early as Tuesday.

"We're not commenting on speculation," a spokesman forMorneau told Reuters, while Kinder Morgan Canada was notavailable for comment outside regular business hours.

Options for the pipeline expansion include the governmentbuying the project and selling it after completion or buying iton an interim basis and selling it to investors for furtherconstruction, the Canadian Press reported.

Morneau had unveiled a third option, which is to leaveconstruction to Kinder Morgan Canada, but cover any costoverruns incurred as a result of political interference, theCanadian Press reported.

(Reporting by Ismail Shakil and Nivedita Balu in Bengaluru;Editing by Amrutha Gayathri)