Progress Energy Canada Ltd. Pacific NorthWest LNG Ltd and Petroliam Nasional Berhad (Petronas) have signed transaction agreements whereby China Petrochemical Corp. (Sinopec), through its affiliates, will acquire a 15% interest in Progress Energy’s LNG-destined natural gas reserves in northeast British Columbia and in the proposed Pacific NorthWest LNG export facility on Canada’s West Coast.
As part of the agreement, Sinopec will offtake 1.8 million tpa of LNG, which represents a pro-rata 15% of the LNG facility’s production, for a minimum period of 20 years.
Sinopec has also signed a binding Heads of Agreement (HOA) with Petronas for the purchase of 3 million tpa of LNG for 20 years sourced primarily from the Pacific Northwest LNG project. The transaction is subject to approval by the Chinese authority.
This transaction builds upon two previously announced transactions in 2013 that saw JAPEX Montney Ltd acquire a 10% interest, PetroleumBRUNEI acquire a 3% interest in the project and the recent announcement on the acquisition of a 10% interest by Indian Oil Corp. Ltd. Following the closing of the Indian Oil Corp. Ltd. and Sinopec acquisitions, Petronas will hold 62% of 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 that Petronas is bringing to the British Columbia LNG export project. Each of the partners will offtake a volume of LNG pro-rata to their upstream and downstream equity interest in the project.
Adapted from press release by Callum O'Reilly