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U.S. asset manager Blackstone and four Canadian institutional investors have signed a $3.1-billion US deal to acquire a non-controlling stake in the Mitsubishi Corp. subsidiary that holds an interest in LNG Canada, the country’s first liquefied natural gas export facility.
The investor group includes the Canada Pension Plan Investment Board, the Ontario Municipal Employees Retirement System, the Investment Management Corp. of Ontario and the Public Sector Pension Investment Board. Blackstone and the funds are together acquiring a 49.9 per cent interest in the Mitsubishi unit.
“LNG Canada is a high-quality, globally strategic asset with strong long-term fundamentals and attractive return potential for the CPP fund,” Geoff Souter, managing director at CPP Investments, said in a news release Monday.
Rick Campbell, senior managing director at Blackstone Credit & Insurance, called LNG Canada “one of Canada’s most significant energy projects,” adding it will “help meet rising energy demands across global markets.”
New York-based Blackstone manages $140 billion US through its infrastructure and asset-based credit platform.
LNG Canada is a joint venture between Shell, PetroChina, Malaysia’s Petronas, Japan’s Mitsubishi Corp. and South Korea’s KOGAS.
Mitsubishi holds a 15 per cent interest through its subsidiary. It will retain its full share of the plant’s LNG supply.
In September, LNG Canada announced it will go ahead with the Phase 2 expansion project at its liquefied natural gas export terminal in Kitimat, B.C.
The expansion will double LNG Canada’s capacity to 28 million tonnes a year.
It has been referred to the federal major projects office, which aims to speed up infrastructure deemed in Canada’s national interest.
Richard Brooks, climate finance director at environmental group Stand.earth, said Canadians should be “extremely alarmed” to see pension funds investing in LNG on behalf of millions of workers and retirees.
“Canadians should have a say where and with whom their retirement funds are invested. While geopolitical instability has driven up interest in Canadian LNG, this is still not a risk-free investment, particularly in the long term,” Brooks said in a news release.
He said the world is scaling up clean energy infrastructure in order to reduce dependence on energy imports. The price of energy has skyrocketed in Europe and Asia since the U.S. and Israel launched their war on Iran in February, disrupting supplies from the Persian Gulf.
“The bottom line is that every dollar of workers’ pensions put into LNG Canada is a dollar not building the clean energy future. That capital should instead be accelerating clean energy projects with better long-term returns,” said Brooks.
Adam Scott, director of Shift Action for Pension Wealth and Planet Health, said the pension funds have broken trust with their members.
“We’re now using our taxes and our retirement savings against us to harm our climate,” he said in a news release. “It’s deeply irresponsible and indefensible.”
Blackstone has provided $150-million in financial backing to another natural gas export project in the works on the West Coast, Ksi Lisims LNG near the Alaska border, through its affiliate Blackstone Energy Transition Partners.
