TransCanada agrees to sell OCENSA pipeline stake

TransCanada PipeLines Ltd., Calgary, said Thursday it would sell its 17.5% interest in Colombia's Oleoducto Central SA (OCENSA) and its 50% interest in CIT Colombiana SA (CITCOL) for $117 million (US) to Calgary-based Enbridge Inc., an energy transportation, distribution, and service provider. Proceeds realized from the sale will help TransCanada strengthen its financial position by focusing on reducing debt and overhead costs, said Doug Baldwin, TransCanada's president and CEO.


TransCanada PipeLines Ltd., Calgary, said Thursday it would sell its 17.5% interest in Colombia's Oleoducto Central SA (OCENSA) and its 50% interest in CIT Colombiana SA (CITCOL) for $117 million (US) to Calgary-based Enbridge Inc., an energy transportation, distribution, and service provider. Proceeds realized from the sale will help TransCanada strengthen its financial position by focusing on reducing debt and overhead costs, said Doug Baldwin, TransCanada's president and CEO.

The OCENSA consortium owns and operates an 800-km crude oil pipeline extending from Colombia's Cuisana and Cupiagua oil fields over the Andes Mountains to the Caribbean port of Cove�as, Colombia. Brought into service in 1997, the OCENSA line transports 480,000 b/d of crude, about 60% of Colombia's oil production.

CITCOL is jointly owned by TransCanada and Enbridge and provides operating services under contract to OCENSA.

The sale is set to close by third quarter 2000, pending final consents and regulatory approvals.

"The acquisition of TransCanada's OCENSA interest strengthens Enbridge's presence in Colombia and South America and is consistent with the company's overall strategic focus on developing its strong base of existing energy delivery businesses through expansion and geographic extension within North America, as well as through attractive international opportunities," said Enbridge. "In addition to having held a 17.5% interest in OCENSA since the project began in 1994, Enbridge is working to close the acquisition of a 45% interest in the Jose crude oil storage and ship loading terminal in Venezuela," the firm said.

In 1999, Enbridge's earnings from OCENSA were about $24 million (Can.). Upon completion of the purchase, Enbridge will be the sole operator of the OCENSA line and could have, subject to third-party rights, an equity interest of as much as 35% in the pipeline. Other OCENSA owners are state firm Empresa Colombiana de Petroleos (25%), BP Colombia Pipelines Ltd. (15.2 %), Total Pipeline Colombia SA (15.2%), and Triton Pipeline Colombia Inc. (9.6%).

In December, TransCanada announced it would sell its international assets and other noncore holdings to focus on its core businesses, which include natural gas transmission, power generation, and marketing activities in Canada and the northern US (OGJ, Dec. 20, 1999, p. 32). The company also said it would sell its midstream assets, its Express Pipeline system, and its Cancarb carbon thermal black manufacturing business. TransCanada plans to use the anticipated net proceeds of $3 billion (Can.) from the sale of its noncore assets to repay debt and enhance its balance sheet.

"TransCanada's competitive advantage is in our low-cost gas transmission assets across the northern tier of North America," said Baldwin in December. He added that the Western Canada Sedimentary Basin on the western end of its pipeline system and the energy markets in eastern Canada and the US give the company "advantages at both ends of our system."

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