State-owned Sinopec of China is in talks with Malaysian company Petronas to buy up to a 15% stake in the US$ 20 billion Pacific Northwest liquefied natural gas (LNG) project in B.C., Canada, sources say.
Earlier in March, Petronas sold a 10% stake in the project to India Oil Corp. (IOC), as well as selling a 10% stake in Progress Energy to the Indian company.
The talks come as Petronas looks to share development costs in the project, which are expected to cost in the region of C$ 11 billion. The project is seeking to implement an LNG export terminal with a capacity of 12 million tpa at Prince Rupert, with operations beginning in late 2018.
The Malaysian company has already sold a 10% interest in the project to Japex and a 3% interest to Petroleum Brunei. If the deal with Sinopec goes through, Petronas will hold a 77% interest in the project.
While domestic production of shale gas is still some years off in China, the country is looking to expand its share of natural gas in its energy mix to 10% by 2020, more than doubling its current position of under 5%. It is also seeking to source LNG from a wider region, outside current suppliers such as Qatar, Australia, Malaysia and Indonesia to meet rising domestic demand. Chinese players Cnooc and PetroChina already have stakes in proposed LNG projects on Canada’s west coast.
IOC and Japex were granted approximately 1.2 million tpa, one tenth of the project’s 12 million tpa capacity. Thus, a 15% investment from Sinopec would secure approximately 1.8 million tpa.
Edited from various sources by Ted Monroe
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