PetroChina meeting obstacles as it seeks to buy South Bow pipeline stake

A judge with the Alberta Court of Kings Bench has ruled PetroChina's attempts to take full ownership the Grand Rapids Pipeline lacks the necessary federal government approval.

PetroChina Canada Ltd. has run into obstacles as it seeks to take full ownership of an Alberta pipeline system.

The Canadian arm of the Chinese state-owned energy giant has a half-interest in the Grand Rapids Pipeline, with Calgary-based South Bow Corp. holding the rest.

Grand Rapids runs 460 kilometres between the oilsands region in northeastern Alberta and the Edmonton area.

PetroChina was seeking to acquire South Bow’s interest under an option contained in their agreement that includes a 30-day time limit, said an Alberta Court of King’s Bench written decision posted online last week.

“The proverbial fly-in-the-ointment is the requirement of two governmental authorizations,” wrote Justice Douglas Mah, who rendered his oral decision in December.

“First, because of the size and nature of the transaction, dispensation is required under the Competition Act,” wrote Mah.

“Second, because PetroChina is a Chinese state-owned enterprise, its acquisition of South Bow’s interest in the pipeline must undergo a net benefit review under the Investment Canada Act. Both of these authorizations take time to get,” Mah added.

PetroChina served South Bow formal notice to exercise the buyout option on Nov. 21 and tendered a draft purchase and sale agreement.