IOC to buy 10% of Petronas's Canadian gas project
Mar 09 2014 , Vancouver/New Delhi
Petronas said it would sell state-owned refiner Indian Oil Corp (IOC) a 10 % stake in its Pacific NorthWest LNG project, along with a 10 % stake in the northern British Columbia shale gas assets that will feed the LNG facility.
India's largest oil refiner also agreed to an offtake deal for 1.2 million tonnes of LNG each year, or about 10 % of the project's annual exports.
Petronas' Pacific NorthWest project is just one of about a dozen LNG terminals proposed for British Columbia's rugged Pacific coast, as top global energy firms scramble to build the facilities to export cheap Canadian gas to hungry Asian markets.
The Malaysian state oil firm, which landed on the scene in 2012 with its C$5.2 billion takeover of Canada's Progress Energy Resources, has moved quickly to leapfrog its rivals. It secured an export permit in December and filed its key environmental documents last month.
Petronas to build a 12 million tonne per year terminal near Prince Rupert, along the province's north coast, with first exports in late 2018. The liquefaction and export facilities are expected to cost up to $11 billion.
Petronas has so far signed on three partners, including Japan Petroleum Exploration Co Ltd (Japex) and state-owned PetroleumBRUNEI, and will hold a 77 % stake when the IOC deal closes.
IOC and Petronas did not disclose the financial details of their deal, but the Indian cabinet approved the purchase of the stake for C$1 billion in February, a government source told Reuters at the time.
Indian companies, like their Asian peers, have been scouting for oil and gas assets abroad to meet rising domestic demand.
India's gas demand will rise to 466 million cubic metres per day (mcmd) in 2016/17 ending March 31 from 286 mcmd in 2012/2013, according to government estimates, while its supply will be only half that amount.
IOC said the super-cooled gas it takes from the Canadian facility each year will meet some of the requirement of its planned 5 million tonne a year Ennore LNG import terminal in Southern India.
Jefferies India Private Ltd acted as sole financial adviser for IOC on the deal, while Stikeman Elliott LLP was its legal adviser.