TORONTO/HOUSTON- Chevron Corp (CVX.N) is exploring options including the sale of a minority stake in its Canadian liquefied natural gas (LNG) project as it pushes ahead, three people familiar with the matter told Reuters.

Among the parties in talks with Chevron for a possible stake in Kitimat LNG are Petroliam Nasional Bhd, or Petronas, which scrapped its own US$36 billion LNG project in British Columbia last year due to challenging market conditions, two of the people said. They spoke on condition of anonymity because the process is private.

Reuters spoke over the past week to the sources, who said there is no certainty that Chevron would proceed with the stake sale.

Chevron is also considering selling a stake in the project to a financial investor such as a Canadian pension fund or a private equity firm, the people added.

Canadian companies Seven Generations Energy Ltd and Tourmaline Oil Corp are in discussions to supply natural gas to Chevron's project, the people said. Seven Generations may also consider buying a stake in the project by partnering with other gas producers, the people said.

The project in British Columbia, a 50/50 joint venture with Australia's Woodside Petroleum Ltd, has a 20-year, 10 million-metric-tonne-per-year export license for LNG and is expected to cost tens of billions of dollars to build.

Kitimat could become one of the largest capital investments in a Canadian energy project, Chevron says on its website.

Taking such a substantial investment decision has been difficult for the duo, given concerns over a global LNG supply glut for the last three years. Fierce political opposition in Western Canada to building pipelines and other energy infrastructure has also escalated in the last several years.

However, surging gas demand from China and Southeast Asia is reassuring export project developers that the market cycle is finally beginning to turn.

Chevron and Seven Generations declined to comment. Petronas and Tourmaline did not respond to requests for comment.

San Ramon, California-based Chevron acquired its 50 per cent stake in Kitimat in early 2013 from EOG Resources Inc and Encana Corp.