LNG Canada, Indigenous Groups Agree $711 Million Equity Option

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(Bloomberg) — Indigenous groups struck a deal for the option to acquire C$1 billion ($711 million) of infrastructure in Canada’s biggest liquefied natural gas project as a major expansion looms.

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A group of First Nations now have the option to acquire majority ownership of a special purpose vehicle that would own the storage tank for the proposed expansion of LNG Canada in British Columbia. That build-out could reach investment approval by the end of the year, according to a statement from the company. 

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LNG Canada’s first phase has been operating in the northern BC town of Kitimat and shipping cargoes to Asia for more than a year. BC Premier David Eby said the final investment decision to build a second phase is due in September. That may more than double the facility’s capacity to 30 million metric tons a year.

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The equity option was agreed between LNG Canada’s shareholders and a consortium called MNT Investments LP, which is made up of the economic development arms of the Gitga’at First Nation, Gitxaala Nation, Haisla Nation, Kitselas First Nation and Kitsumkalum, which are near the gas plant.

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The 225,000 cubic-meter storage tank — which LNG Canada says is among the largest in the world — would then be leased back to the company, which would operate and maintain it. The deal is another preparatory step pointing toward the major potential investment decision in LNG Canada’s second phase. In March, TC Energy Corp. entered into commercial agreements with LNG Canada for the second phase of the project’s supply pipeline. 

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Indigenous groups in Canada have won legal rights to consultation and accommodation in relation to major projects like LNG Canada, and have started taking increasingly significant equity stakes in them. If fully exercised, the LNG storage tank option would constitute one of the largest such deals yet. Canada’s federal government and some provinces offer loan guarantee programs worth billions, which will unlock more transactions of this kind.

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LNG Canada is 40% owned by Shell Plc, 25% by Petroliam Nasional Bhd, 15% by PetroChina Co., 15% by Mitsubishi Corp., and 5% by Korea Gas Investments Co Ltd.

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