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PETRONAS forms strategic partnersip with Progress Energy to develop Canadian shale assets

LNG Industry,

PETRONAS has reached an agreement to form a strategic partnership with Canada-based Progress Energy Resources Corporation to develop the Altares, Lily and Kahta shale gas assets in northeastern British Columbia.

Under the agreement Petronas will acquire 50% of Progress’ interest in the three areas for a total consideration of CDN$ 1.07 billion (RM3.32 billion). The assets included in the transaction cover approximately 150,000 gross working-interest acres of land with an estimated contingent gas resource of more than 15 trillion ft3. The assets will be operated by Progress.

The proposed acquisition will mark PETRONAS’ maiden entry into Canada and will allow for accelerated upstream growth that could potentially advance a LNG export value proposition in that country. PETRONAS views the acquisition as a highly attractive opportunity, paving its entry into the North American shale gas industry while at the same time further strengthening its position as a leading global LNG player.

As part of the acquisition, PETRONAS and Progress have agreed to establish an LNG Export joint venture to conduct a feasibility study on the economic viability of an integrated LNG export facility in Western Canada. This could provide a strategic alternative to the traditional North American pipeline gas market.

The two companies have also agreed to collaborate on other potential natural gas opportunities in Western Canada.

The transaction is conditional upon relevant regulatory approvals and PETRONAS expects the transaction to close in the third quarter of 2011.

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