Malaysian energy company PETRONAS is apparently back as an active LNG player in Canada, with the announcement today that it is buying a 25% equity stake in LNG Canada. LNG Canada is a proposed natural gas export project that is planned for Kitimat, British Columbia, Canada.
The move was unexpected after PETRONAS withdrew from the $36 billion Pacific NorthWest LNG Project last summer, a move that put an end to that project.
LNG Canada
The LNG Canada Project was started in 2011 by Shell, PetroChina, KOGAS, and Mitsubishi Corporation as a proposal to design and build, and operate, an LNG export terminal. The proposed facility is comprised of LNG processing units, storage tanks, LNG loading lines, a marine terminal, a rail yard, a water treatment facility, flare stacks, and is estimated to be a $40 billion project.
LNG Canada recently selected the joint venture of JGC Corporation and Fluor Corporation as the engineering, procurement and construction (EPC) contractor for the project and is currently finalizing materials in preparation for a final investment decision (FID) by joint venture participants. The partners have not announced a FID as of yet.
Two weeks ago, which was prior to the PETRONAS announcement, LNG Canada’s CEO made a commitment to bringing this project to a FID and to begin construction in 2018.
PETRONAS did not release terms of the deal.
The proposed LNG Canada project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of liquefied natural gas (LNG), including marine facilities. The plant will initially consist of two world-scale LNG processing units or trains, with an option to expand the project in the future to four trains.
PETRONAS said it expects to complete the purchase transaction in 2018. If the deal consummates, the ownership composition will include:
- PETRONAS (25%)
- Shell Canada Energy (40%)
- PetroChina Canada Ltd. (15%)
- Diamond LNG Canada Ltd., a subsidiary of Mitsubishi Corporation, (15%)
- KOGAS Canada LNG Ltd. (5%)
PETRONAS and its North Montney joint venture partners currently own over 52 Tcf of reserves and contingent resources in the province. PETRONAS intends to develop its unconventional gas and oil resources in British Columbia’s North Montney through its wholly-owned subsidiary Progress Energy Canada Ltd.
The Pacific Northwest LNG project, from which PETRONAS withdrew last year, would have been capable of exporting 19.2 tons of LNG per year and would have represented a $36 billion-dollar investment.
