The National Post is Canada’s second largest national paper.
CALGARY — Plans for a new industry to sell Canadian natural gas to Asia moved a lot closer to take off with two big moves by Petronas, the Malaysian national oil company.
The Kuala Lumpur-based giant offered Thursday to take over Calgary-based natural gas producer Progress Energy Resources Corp. for $5.5-billion, or $20.45 a share in cash — a 77% premium over Wednesday’s closing price. The deal builds on last year’s $1.07-billion joint venture between the two companies to develop Progress’s Montney shale assets in British Columbia.
Petronas also said it plans to build a liquefied natural gas (LNG) plant on Lelu Island near Prince Rupert, on the northern British Columbia coast, to ship 7.4 million tonnes a year from two trains, with the first cargo bound for Asia in 2018.
With Petronas’s advance, there are now three major LNG projects moving head in the B.C. coast, representing a solid platform for the emerging industry and providing a new market for depressed Western Canadian gas. Asia’s gas prices are much higher because they are linked to oil prices and there is demand to absorb huge supplies from shale fields such as the Horn River and the Montney.
Apache Corp. and partners Encana Corp. and EOG Resources Inc. are working on a Kitimat-based, 10-million-tonnes-a-year plant that is aiming for startup in 2017. The Kitimat LNG project is a year behind as the group continues look for firm contracts with buyers in Asia.
LNG Canada, headed by Royal Dutch Shell PLC, with partners PetroChina, Mitsubishi Corp. and Korea Gas Corp., is another Kitimat-based facility. It plans to export 12 million-tonnes-a-year starting in 2019.
Petronas’s advantage is that it’s now in full control of all aspects of the pan-Pacific business — natural gas resources in Western Canada, the LNG plant in B.C., the Asian market.
“We don’t want to race, but we have the capability, we have the network, we have the customers, so I think we can do it better than the rest,” said Datuk Anuar Ahmad, executive vice-president of Petronas’s gas and power business.
The rapidly advancing plans show the hurdles of putting together complex strategies straddling two regions with no previous energy trade are being overcome. It was barely a year ago that Asian customers started taking a serious look at Canada as an LNG supplier in the aftermath of Japan’s nuclear disaster.
For the rest of this article, please go to the National Post website: http://business.financialpost.com/2012/06/28/canadas-natural-gas-dreams-closer-to-reality-after-petronas-moves/