Malaysia’s Petroliam Nasional Bhd. agreed to take a 25 per cent stake in a proposed liquefied natural gas project in Canada led by Royal Dutch Shell Plc.
The Canadian unit of Shell will hold a 40 per cent stake, while subsidiaries of PetroChina Co. and Mitsubishi Corp. will have a 15 per cent share each, according to a statement Thursday from Petronas. A unit of Korea Gas Corp. will hold 5 per cent. The proposed C$40 billion (US$31 billion) export facility at Kitimat near Prince Rupert -- North America’s closest port to Asia -- could eventually have capacity to ship 26 million tons a year of liquefied gas.
The agreement marks a turnaround by Petronas after it abandoned its own US$27 billion LNG proposal in British Columbia last July after the project faced spiraling costs and staunch opposition from environmental and indigenous groups. That decision left it without a plan to ship gas produced by its Progress Energy Canada unit to Asia as originally intended.
“Petronas is in Canada for the long term and we are exploring a number of business opportunities that will allow us to increase our production and accelerate the monetization of our world-class resources in the North Montney,” Petronas Chief Executive Officer Wan Zulkiflee Wan Ariffin said in the statement. “LNG is just one of those opportunities.”
Buying into the Shell-led project will help Petronas revive that prospect of shipping Canadian gas overseas and may also bring financing and gas supplies to LNG Canada as the group nears a final investment decision, expected this year. Petronas’s Progress unit could contribute an additional 560 million cubic feet a day of production to the project, meaning it would have all the gas it needs to meet its initial export target, according to National Bank of Canada analyst Greg Colman.
Shell and its partners have twice delayed a final investment decision on the project amid a global supply glut. But in recent months, Shell has indicated the window for competitive projects may be reopening, saying that global LNG demand exceeded expectations last year and that the market may again face a supply shortage by the mid-2020s.
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