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Rediff News  All News  » Business » IOC to buy stakes in Petronas' LNG project for $900 mn

IOC to buy stakes in Petronas' LNG project for $900 mn

March 07, 2014 19:28 IST

Indian OilIndian Oil Corporation on Friday signed a deal to buy a 10 per cent stake in shale-gas assets and a linked liquefied natural gas project in British Columbia for $900 million.

The acquisition of stake in Progress Energy Resources Corp's shale gas assets and Pacific NorthWest LNG for 1 billion Canadian dollars ($900 million) marks IOC's maiden entry into North America.

Announcing the deal, Petroliam Nasional Bhd, Malaysia's state oil company, said it has signed transaction agreements to sell a 10 per cent interest in Progress Energy's LNG- destined natural gas reserves in northeast British Columbia and in the proposed LNG export facility on Canada's West Coast.

"As part of the transaction, IOC has also agreed to offtake 1.2 million tons of liquefied natural gas per annum, which represents 10 per cent of the LNG facility's production, for a minimum period of 20 years," Petronas said in a statement.

The Malaysian firm, through its wholly-owned subsidiary Petronas International Corp, had in 2011 bought Canada's Progress Energy Resources Corp in a 5.2 billion Canadian dollars deal to get the Altares, Lily and Kahta shale gas assets in north-eastern British Columbia.

In March 2013, it sold a 10 per cent stake in the integrated shale gas development and LNG project to Japan Petroleum Exploration Co (Japex) and another 3 per cent to Petroleum Brunei.

After the transaction with IOC, Petronas will hold 77 per cent of the integrated project, the statement said.

The Canadian asset will produce as much as 19.68 million tonnes of LNG a year for 25 years starting in 2018.

Progress Energy has more than 1.9

trillion cubic feet of proved and probable gas reserves in British Columbia.

The Malaysian firm is planning to build a liquefied natural gas terminal off Canada's Pacific Coast, aimed at exporting natural gas to Asian markets.

IOC, which had previously ventured into overseas oil and gas exploration and production with state-owned explorer OIL India Ltd, went for the Petronas deal on its own.

Company officials said IOC has lined up a $900 million one-year bridge loan from a group of banks to fund the purchase of a stake in Petronas's Canadian gas projects.

Progress Energy, a leader in Canadian natural gas development, produces more than 400 million cubic feet equivalent of natural gas per day in northeast British Columbia and northwest Alberta.

It is wholly-owned by Petronas, a global leader in LNG and the majority owner of Vancouver-based Pacific NorthWest LNG Ltd.

Pacific NorthWest LNG is planning to build a world-scale LNG export facility on Canada's West Coast at Lelu Island near Prince Rupert, British Columbia.

The proposed facility will comprise an initial development of two LNG trains of approximately 6 million tonnes per annum each and a subsequent development of a third train of approximately 6 million tonnes.

The proposed facility would liquefy and export natural gas produced by Progress Energy Canada in northeastern British Columbia.

Petronas is the majority owner of Pacific NorthWest LNG.

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