Canada's Desjardins mulls withdrawal from Kinder pipeline expansion

CALGARY, Alberta, Sept 12 (Reuters) - Canadian lender Desjardins is considering backing out of its C$145 million ($113 million) commitment to Kinder Morgan Inc’s Trans Mountain pipeline expansion, two people present at a meeting with the financial institution told Reuters.

At the meeting last Thursday, Desjardins senior executives told aboriginal leaders the lender will consider their request to pull its financing for the C$7.4 billion ($6.1 billion) project, said Eugene Kung, a lawyer for the west coast Tsleil-Waututh Nation, who was at the event.

Desjardins is a minor lender for the project, but a potential pull back would go beyond an announcement in July when it temporarily suspended lending for future oil pipelines. Desjardins, the largest association of credit unions in North America, said it may make the decision permanent this month, citing concerns about the impact pipelines may have on the environment.

Desjardins spokesman André Chapleau said in a statement the financial institution’s “positioning on this issue has not yet been completed.”

“We are listening to various stakeholders, internally and externally, and we do not intend to make our exchanges public in all due respect to our stakeholders,” Chapleau said.

Kinder Morgan Canada, a division of Houston’s Kinder Morgan Inc, did not immediately respond to requests for comment.

The expansion is already facing opposition from environmental and aboriginal groups and the government of the British Columbia province, through which the pipeline passes.

The Trans Mountain expansion would nearly triple the capacity of the existing pipeline from Canada’s oil heartland of Alberta to the west coast. Canadian producers, whose landlocked product trades at a discount to the West Texas Intermediate benchmark, say they need more export capacity to fetch better prices.

In June, Dutch lender ING Groep NV said it would not finance any of Canada’s major pipeline projects. .

At Thursday’s meeting in the French-speaking Quebec province, where Desjardins is based, the financial institution said also it would consider its ethics and values more than economics when it makes a final decision on whether to reject future pipelines, said Grand Chief Serge Simon of the Mohawk Council of Kanesatake, who was at the event.

Desjardins is among 24 financial institutions that agreed to lend C$5.5 billion to Kinder Morgan for Trans Mountain, according to regulatory filings. Desjardins executives said on Thursday a final decision could be expected by the end of this month, lawyer Kung said.

$1 = 1.2874 Canadian dollars Reporting by Ethan Lou; editing by Grant McCool