India’s biggest oil company has bought a 10 per cent stake in the Progress Energy LNG project in British Columbia, in a deal that will guarantee it access to gas exported from Canada for 20 years.
Petronas, which bought Progress Energy Canada in 2012, announced the sale to state-owned Indian Oil Corp. on Friday.
The New Delhi-based refiner is guaranteed 1.2 million metric tons of liquefied natural gas per year for two decades from the B.C. LNG project, which could be in operation by 2018.
The deal is unusual in guaranteeing access to Canadian gas for India. No financial terms were released for the deal.
- Progress Energy picks TransCanada for $5B pipeline expansion
Petronas, Progress Energy Canada and Pacific NorthWest LNG propose to make a decision this year on whether to proceed with the Pacific NorthWest LNG export facility on the B.C. coast, near Prince Rupert, which would require a total investment of $9-11 billion.
Progress Energy and its North Montney Joint Venture have at least 8.35 trillion cubic feet of gas reserves in British Columbia fields to support the LNG project. Progress has ambitious plans for 2014, and plans to drill an estimated 170 wells in B.C.
Malaysia-based Petronas, which paid $5.2 billion for Progress Energy, plans to reduce its share in Pacific NorthWest LNG to as low as 50 per cent by selling stakes to Asian gas buyers, the unit’s President Greg Kist said in November
It sold 10 per cent to Japan Petroleum Exploration Co. last year and another three per cent to PetroleumBrunei. Petronas currently owns 77 per cent of the project.
“We are assembling an industry-leading project and our growing partner list adds momentum to building an exciting new energy export sector for Canada,” Kist said in a press statement.
This year, the LNG facility planned near Prince Rupert, B.C. will undergo an environmental review by the Canadian Environmental Assessment Agency and the B.C. Environmental Assessment Office.
It already has an export licence from the National Energy Board and plans to build two pipelines to carry gas from the Groundbirch area, about 35 km southwest of Fort St. John, B.C. and from the North Montney Joint Venture in northeastern B.C.
The company said it is in consultation with First Nations and communities along the pipeline routes as well as residents of Prince Rupert.