Petronas takes 25% stake in Shell-led Canadian LNG project

Petronas takes 25% stake in Shell-led Canadian LNG project”

Malaysia's Petronas has taken a stake in the Shell-led Canada liquefied natural gas project in Kitimat, British Columbia.

Petronas said in a statement that its wholly owned entity the North Montney LNG Ltd Partnership had entered into a purchase and sales agreement for the deal.

The investment from Petronas comes as the joint venture, led by Royal Dutch Shell, announced in March that it would commence construction on the project later this year, following previous delays in 2016.

"Petronas is pleased to be part of the LNG Canada project".

LNG Canada has recently awarded JGC Corp. and Fluor Corp. the engineering, procurement and construction (EPC) contract for the project.

The buy-in is still subject to various regulatory approvals, and will take a few months to be finalized.

A year ago, it and its partners cancelled their $36-billion Pacific NorthWest LNG project near Port Edward, B.C., due to prolonged low LNG prices.

"We are committed to deliver LNG and natural gas, the cleanest fossil fuel in the world, to the growing global energy market", he added.

This isn't the first time ownership in the project has changed hands - in 2014 Shell increased its share from 40 to 50 per cent after Mitsubishi and KOGAS reduced their ownership from 20 to 15 per cent.

The addition of Petronas helps answer the question of where LNG Canada will obtain the gas - up to four billion cubic feet per day - it will require, the CIBC analysts added. LNG Canada and Woodfibre LNG have both stated that Canada does not have the expertise to build the large LNG modules needed to chill natural gas to below 160 below Celsius, and have appealed to the federal government for exemptions. The project would consist of two LNG processing units that could produce as much as 6 million tons of super-cooled gas per year each and, with Asian economies among the largest consumers of LNG in the world, Shell's partners at the time said the project would be a valuable asset. "The timing and outcome of an FID will be decided by joint venture participants based on global energy markets, and the overall competitiveness and affordability of the project".

A joint venture of JGC Corp. and Fluor Corp. has been selected as the engineering, procurement and construction (EPC) contractor for the project and is now finalising materials in preparation for a final investment decision (FID) by joint venture participants.

Canada is Petronas' second largest resource holder after Malaysia, with vast unconventional gas and oil resources in the North Montney.

TransCanada Corp. has proposed building the $4.7-billion Coastal GasLink pipeline to help transport natural gas from the Dawson Creek area in northern the LNG facility.

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