Brookfield Infrastructure Partners LP could be a potential buyer of the Canadian government-owned Trans Mountain oil pipeline, a Stifel FirstEnergy analyst said, as the project expansion struggles with increasing costs arising from regulatory delays.
In 2018, Ottawa bought the 67-year-old pipeline for C$4.5 billion to ensure expansion proceeded, but has faced opposition by environmental and some indigenous groups.
Brookfield could be a potential “dark horse”, as it recently completed a $20 billion capital raise, and continues to have excellent access to capital markets, analyst Ian Gillies said in a research note on Monday.
“We would also expect various indigenous groups to pursue acquiring the pipeline”, Gillies wrote, adding that any further cost overruns would make Trans Mountain an unattractive M&A candidate for existing Canadian infrastructure companies.
Trans Mountain and Brookfield were not immediately available for comment.
The expansion of the Trans Mountain oil pipeline is expected to cost C$12.6 billion ($9.46 billion), a sharp increase from a previous estimate, due to court and regulatory delays, rising costs of land, labor and accommodations for indigenous groups who had raised concerns.
Last week Canada’s Federal Court of Appeal dismissed a challenge to government approval of the pipeline expansion, clearing some uncertainty from the project.
Toronto-Canada based Brookfield Infrastructure Partners, which engages in the acquisition and management of infrastructure assets, last year bought a number of federally-regulated natural gas gathering and processing assets from pipeline operator Enbridge .
Bloomberg earlier reported that Canada’s government will start a new round of consultations aimed at hashing out an agreement between indigenous groups that are competing for a stake in the Trans Mountain pipeline.