A liquefied natural gas project in British Columbia led by Malaysia’s state-owned Petronas continues to gather momentum with the addition of a fourth Asian partner.
China Petrochemical Corp. (Sinopec) has agreed to take a 15-per-cent equity stake in the Pacific Northwest LNG project, it was announced.
Sinopec has also agreed to purchase three million tonnes per year of LNG over 20 years, sourced primarily from Pacific Northwest, in addition to 1.8 million tonnes yearly in an equity offtake.
The deal follows on an agreement struck less than two months ago with state-owned Indian Oil Corporation Limited, which is taking a 10-per-cent stake in Pacific Northwest.
The other partners are Japan Petroleum Exploration Co. Ltd., through Japex Montney Ltd., with 10 per cent, and PetroleumBrunei with 3 per cent.
This latest transaction agreement boosts Pacific Northwest’s prospects. It is one of 14 projects proposed for British Columbia’s coast intended to feed growing Asian demand for natural gas.
But only three or four of the capital-intensive proposals will actually end up being built, according to some experts.
“While the market has known for some time that a large Asian party has been in negotiations with Petronas, the agreement is still showing that Canadian LNG momentum is gathering visibility,” Dundee Capital Markets analyst Maxim Sytchev said in a research note.
“The geopolitical uncertainty in Europe where energy has once again become a policy tool, makes the potential Canadian supply an attractive option from a supplier perspective.”
Once the Sinopec and Indian Oil transactions close, Petronas will own 62 per cent of Pacific Northwest, Sinopec and its affiliates Progress Energy Canada Ltd. and Pacific Northwest LNG Ltd. said in a news release.
“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 and chief executive officer of Calgary-based Progress Energy.