The Coastal GasLink (CGL) project, operated by TC Energy, has been a significant investment in the Canadian energy sector. The project was initially estimated to cost $6.2 billion but has since seen costs rise to an updated estimate of $11.2 billion1. Despite these rising costs, the project is well underway, with the pipeline about 75% complete and the LNG Canada project, including its liquefaction and export facility, 70% complete1.
Regarding the arbitration case, CGL is seeking C$1.2 billion ($737 million) from one of its main contractors, PAPC, for construction delays2. If the arbitrator rules against CGL, it may be liable for a similar amount2. The arbitration is set to take place in November 20243.
In terms of financial resources, CGL has several avenues. The project is owned by TC Energy, with a 65% equity interest held by investment management firm Aimco and private equity firm KKR4. This backing could potentially provide financial support. Additionally, Banktrack identifies 27 financiers of Coastal GasLink that have given the project a $6.4-billion loan estimated to cover 80% of the project’s cost5.
Furthermore, the province of British Columbia estimated it would receive around $23 billion in government revenues over the 40-year lifespan of LNG Canada1. This suggests that there is a significant expected return on investment, which could potentially be used to cover any liabilities arising from the arbitration.
However, it’s important to note that the final decision will depend on the outcome of the arbitration and the specific terms of the contracts involved. It’s also worth considering that the financial landscape can change rapidly due to factors such as market fluctuations, changes in demand for natural gas, and other unforeseen circumstances. Therefore, while CGL appears to have substantial financial resources, the impact of the arbitration outcome on its financial viability will depend on a variety of factors. It would be advisable for any interested parties to seek professional financial advice for a more detailed analysis.Could you shed some light on the financial viability of Coastal Gas Line? It is headed to arbritration against multiple contractors who seem to have a strong case. Should CGL lose in arbritation, what are its financial options. Will it have the financial resources to discharge the obligations imposed by the arbitrators?
The Coastal GasLink (CGL) project, operated by TC Energy, has been a significant investment in the Canadian energy sector. The project was initially estimated to cost $6.2 billion but has since seen costs rise to an updated estimate of $11.2 billion1. Despite these rising costs, the project is well underway, with the pipeline about 75% complete and the LNG Canada project, including its liquefaction and export facility, 70% complete1.
Regarding the arbitration case, CGL is seeking C$1.2 billion ($737 million) from one of its main contractors, PAPC, for construction delays2. If the arbitrator rules against CGL, it may be liable for a similar amount2. The arbitration is set to take place in November 20243.
In terms of financial resources, CGL has several avenues. The project is owned by TC Energy, with a 65% equity interest held by investment management firm Aimco and private equity firm KKR4. This backing could potentially provide financial support. Additionally, Banktrack identifies 27 financiers of Coastal GasLink that have given the project a $6.4-billion loan estimated to cover 80% of the project’s cost5.
Furthermore, the province of British Columbia estimated it would receive around $23 billion in government revenues over the 40-year lifespan of LNG Canada1. This suggests that there is a significant expected return on investment, which could potentially be used to cover any liabilities arising from the arbitration.
However, it’s important to note that the final decision will depend on the outcome of the arbitration and the specific terms of the contracts involved. It’s also worth considering that the financial landscape can change rapidly due to factors such as market fluctuations, changes in demand for natural gas, and other unforeseen circumstances. Therefore, while CGL appears to have substantial financial resources, the impact of the arbitration outcome on its financial viability will depend on a variety of factors. It would be advisable for any interested parties to seek professional financial advice for a more detailed analysis.