Petronas has entered into an agreement to acquire a 25% equity stake in the LNG Canada project in British Columbia.
Once the transaction is complete, ownership in the project in Kitimat will be 25% Petronas (through its wholly-owned entity North Montney LNG), 40% Shell Canada Energy, 15% PetroChina Canada, 15% Diamond LNG Canada and 5% Kogas Canada.
The project includes the design, construction and operation of a gas liquefaction plants and facilities for the storage and export of LNG, including marine facilities.
It will initially consist of two world-scale LNG processing units, with an option to expand the project in the future to four units.
Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin says: 'As one of the world's largest LNG producers, Petronas looks forward to adding value to this venture through our long-term expertise and experience across the LNG value chain.
'Petronas is in Canada for the long-term and we are exploring a number of business opportunities that will allow us to increase our production and accelerate the monetisation of our world-class resources in the North Montney. LNG is just one of those opportunities.'
Prasanth Kakaraparthi, senior analyst, Wood Mackenzie, says that this announcement markets an interesting turn of events for the company.
He adds: 'Petronas has signalled its intent to become a portfolio plater and has taken steps to diversify its supply sources. Once both phases are executed, LNG Canada could add up to 7mt of equity into Petronas portfolio – nearly 20% of its 2023 supply.
'We believe this to be a positive development for Petronas. We expect the global LNG market to tighten post 2022 and this bodes well for the project.
'But activity has returned to the LNG space with a number of projects expecting to take FID ahead of 2019. A new wave of project sanctions and rising oil prices could push up project costs and dampen the economics.'
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