Malaysia's national oil company Petroliam Nasional Berhad (Petronas) announced Tuesday that the firm and its subsidiaries Progress Energy Canada Ltd and Pacific NorthWest LNG Ltd have signed transaction agreements with China Petrochemical Corporation (Sinopec) where Sinopec, through its affiliates, will acquire a 15 percent interest in Progress Energy’s LNG-destined gas reserves in northeast British Columbia and in Pacific NorthWest’s proposed LNG export facility on Canada’s West Coast.
As part of the transaction, Sinopec has also agreed to off-take 1.8 million tons of LNG per annum (Mtpa), which represents a pro-rata 15 percent of the LNG facility’s production, for a minimum period of 20 years.
In addition to the transaction, Sinopec, through its affiliate, has also signed a binding Heads of Agreement with Petronas for the purchase of additional 3 Mtpa of LNG for 20 years, sourced primarily from the Pacific NorthWest LNG project. This additional volume of 3 Mtpa, combined with the 1.8 Mtpa of equity LNG off-take, makes Sinopec one of the largest LNG buyers from Petronas’ portfolio.
This transaction with Sinopec follows the two previously announced transactions in 2013 that saw Japex Montney Ltd and PetroleumBRUNEI acquire 10 percent and 3 percent interests respectively in the project. Recently, Petronas announced the 10 percent equity participation in the project by Indian Oil Corporation Ltd. Following the completion of the acquisitions by Indian Oil Corporation Ltd and Sinopec, Petronas will hold a 62 percent interest in the integrated project and will continue to work with potential customers and partners to secure markets for LNG.
Sinopec is the fourth partner in a consortium of LNG buyers which Petronas is bringing to the British Columbia LNG export project. Each of the partners will off-take a volume of LNG prorata to their upstream and downstream equity interest in the project.
“We are pleased to conclude the addition of another Pacific Rim market and investment into British Columbia which continues to highlight the attractiveness of Canadian natural gas,” said Michael Culbert, president & CEO of Progress Energy in Calgary.
“Our energy export sector continues to gain momentum with this transaction and the addition of a fourth investor,” added Greg Kist, president of Pacific NorthWest LNG in Vancouver.
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