Petronas wants a 25-per-cent stake in LNG Canada

Deal is subject to international regulatory approvals

Malaysian oil and gas giant Petronas has announced it intends buying a 25-per-cent stake in the LNG Canada project.

Should the purchase go ahead — it is subject to regulatory approvals and closing conditions — it would make Petronas the second-largest equity owner in the project behind Shell, which has 40 per cent. The remainder is held by PetroChina with 15 per cent, Mitsubishi Corporation with 15 per cent, and Kogas Canada with five per cent.

This isn’t the first time ownership in the project has changed hands. In 2014 Shell increased its share from 40 to 50 per cent after Mitsubishi and KOGAS reduced their ownership from 20 to 15 per cent. At the time PetroChina kept its ownership at 20 per cent.

Petronas’ intention to buy into LNG Canada follows on Petronas and its partners’ July 2017 decision to cancel the $36-billion Pacific NorthWest LNG project they had planned to build on Lelu Island off Port Edward.

At the time Petronas and its partners cited changes in market conditions as their reasons for cancelling the project — specifically prolonged depressed prices and shifts in the energy industry.

LNG prices had been hit by a global oversupply as numerous projects came online, challenging the economics of the development and others that were proposed in the province.

The consortium had already sunk billions into developing the natural gas fields in the northeast B.C. interior.

Earlier this month LNG Canada announced that it had picked Fluor Corp. of Irving, Texas, and JGC Corp., based in Japan, to build the plant in Kitimat given a positive final investment decision.

LNG Canada also said a decision on whether to go ahead with the $40-billion terminal will be made by the end of 2018. The project would include TransCanada’s proposed $4.7-billion Coastal GasLink pipeline from northeastern B.C. to Kitimat.

A statement released by Shell Canada stressed that Petronas indicating it intends to buy a stake in the project “does not amount to an FID, which remains pending.”

“The timing and outcome of an FID will be decided by joint venture participants based on global energy markets, and the overall competitiveness and affordability of the project.”

Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin said the transaction would be completed in the next few months, “subject to international regulatory approvals and the completion of other associated agreements.”

“Petronas is pleased to be part of the LNG Canada project. As one of the world’s largest LNG producers, the company looks forward to adding value to this venture through our long-term expertise and experience across the LNG value chain.”

Ariffin said having an equity position in LNG Canada will allow it to develop its natural gas resource in the North Montney, northeast B.C., through its subsidiary Progress Energy.

“Canada is Petronas’ second largest resource holder after Malaysia, with vast unconventional gas and oil resources in the North Montney. Petronas and its North Montney joint venture partners are one of the largest natural gas resource owners in Canada.”

LNG

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