Dec 22 (Reuters) – Canadian National Railway Co said on Friday it will buy 200 locomotives in the next three years from General Electric Co, betting on higher demand for crude oil transportation.
The move comes as oil and gas producers in Canada’s energy-rich Alberta province clamor to get their barrels to market via rail amid supply disruptions resulting from a leak in TransCanada Corp’s Keystone pipeline.
Crude-by-rail shipments are also expected to rise next year as supply from new projects increases and outpaces current pipeline capacity.
“We are bullish on the North American economy and on our ability to compete and win new business with our superior service model,” CN Chief Executive Luc Jobin said in a statement.
Most railroad companies have lost money in the past when they expanded capacity only to face falling demand when oil prices collapsed in 2014 or when new pipelines began operation. Brent is now trading firmly above $60 a barrel.
Canadian National, the nation’s biggest railway operator, said the purchase was the largest among Class I railways the biggest railroads by operating revenues since 2014.
The locomotives will be produced at GE’s Fort Worth, Texas facility, CN said.
CN shares were slightly higher at C$104.24 on Friday morning on the Toronto Stock Exchange. (Reporting by Anirban Paul in Bengaluru; editing by Sai Sachin Ravikumar)
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