The Canadian government is backing up to C$2 billion ($1.5 billion) in new commercial loans for Trans Mountain Corp (TMC), the crown corporation building an over-budget and long-delayed oil pipeline expansion to the Pacific coast.
Information posted on Export Development Canada’s website on Friday showed a C$1.75 billion to C$2 billion loan guarantee for TMC was signed on Nov. 30. The government’s backing lowers the risk to lenders and would help TMC secure loans at lower interest rates.
Before the latest guarantee, Ottawa had backed up to C$6 billion in loans for government-owned TMC in 2023.
Last year, TMC secured C$10 billion in government-backed financing to help cover the expansion of a pipeline that will nearly triple the flow of crude from landlocked Alberta’s oil sands to the Pacific coast province of British Columbia.
The expansion project is meant to unlock Asian markets for Canadian oil, which is mostly exported to the United States now.
Prime Minister Justin Trudeau’s Liberal government bought the troubled project in 2018 to ensure its completion.
The project has been hampered by regulatory obstacles, environmental opposition and construction delays, and costs have ballooned to C$30.9 billion, more than quadrupling the C$7.4 billion budgeted in 2017.
In the latest setback, the Canada Energy Regulator said on Wednesday it denied a variance request for the project because TMC’s application did not adequately address concerns about pipeline integrity and environmental protection impacts.
TMC has asked the regulator to reverse its variance decision on the grounds it could cause a “catastrophic” two-year delay and billions of dollars in losses.
The expanded pipeline is meant to start shipping crude by the end of the first quarter of 2024. The risk of further delays is weighing on Canadian crude prices.
(Reporting by Ismail Shakil in Ottawa Editing by Chris Reese)