Brookfield Infrastructure Partners has announced it made a $10.6 billion offer for the Canadian company Inter Pipeline. The offer is about $900 million higher than a bid Inter Pipeline rejected nearly two years ago, in 2019.
In a clear show of faith in the business, Brookfield has also announced it has already become the largest shareholder of Inter Pipeline, holding roughly 20% of the company’s shares. Inter Pipeline Assets include over 4,300 miles (7,000 km) of pipeline, natural gas liquid processing plants, and storage for over 5 million barrels of oil in Canada.
While not yet approved by Inter Pipeline, the offer is a clear bet by Brookfield that the fossil fuel industry will remain a key energy source in the medium to long term. But, the pipeline industry does have some specific advantages.
While obviously not completely insulated from the health of companies in the oil industry, pipelines can be more attractive than a traditional energy investment. Long term contracts help to insulate pipeline owners from extreme fluctuations in oil prices, such as those seen in 2020.