Canada's Enbridge to sell oil pipelines stake to Indigenous groups for C$1.12 billion

FILE PHOTO: FILE PHOTO: Pipelines run to Enbridge Inc.'s crude oil storage tanks at their tank farm in Cushing

By Ankit Kumar and Rod Nickel

(Reuters) - Canada's Enbridge Inc will sell a C$1.12 billion ($818.83 million) minority stake in seven Alberta oil pipelines to a group of Indigenous communities, in North America's largest energy-related Aboriginal partnership, the company said on Wednesday.

Athabasca Indigenous Investments (Aii), a newly formed entity of 23 First Nations and Métis communities, will buy the 11.57% non-operating interest in the pipelines.

First Nations in Canada are divided about oil and gas projects that involve traditional lands. Some communities oppose them over environmental concerns while others prize the jobs and revenue they provide.

The Canadian government has a legal duty to consult meaningfully with Indigenous groups on major new resource projects.

Revenue from the pipelines will help First Nations improve their quality of life through home-building and by addressing a mental health crisis, said Chief Greg Desjarlais of Frog Lake First Nation at a press conference.

"Our people should not live in poverty in the land of milk and honey," he said.

The deal, expected to close within the next month, involves pipelines in Alberta's Athabasca region, including the Athabasca and Wood Buffalo/Athabasca Twin, and associated tanks, handling 45% of the oil sands' output under contract.

"We want to become partners with Indigenous communities across the entire system ... on both sides of the border," said Enbridge Chief Executive Officer Al Monaco. Asked if he was open to selling part of the Mainline oil network, Monaco said it was too early to say.

Aii is making the purchase with funds from a private placement, and the Alberta government is providing a C$250 million loan guarantee.

Rival TC Energy Corp this year signed an option agreement to sell 10% in the Coastal GasLink pipeline to Indigenous communities.

The Canadian government has also signaled its plan to sell at least part of its Trans Mountain pipeline to Indigenous groups once its expansion is closer to completion, expected late next year.

($1 = 1.3678 Canadian dollars)

(Reporting by Ankit Kumar and Rod Nickel; editing by Uttaresh.V and Richard Chang)