Progress Energy Canada and Pacific NorthWest LNG welcome fourth buyer to British Columbia LNG export project Momentum for Canadian-led LNG export sector continues to build
Progress Energy Canada Ltd. (Progress Energy), Pacific NorthWest LNG Ltd. (PNW LNG) and Petroliam Nasional Berhad (PETRONAS) have signed transaction agreements whereby China Petrochemical Corporation (SINOPEC), through its affiliates, will acquire a 15 percent interest in Progress Energy's LNG-destined natural gas reserves in northeast British Columbia and in the proposed PNW LNG export facility on Canada's West Coast. As part of the transaction, SINOPEC has agreed to offtake 1.8 million tonnes of LNG per annum (MTPA), which represents a pro-rata 15 percent of the LNG facility's production, for a minimum period of 20 years.
In addition to the transaction, SINOPEC, through its affiliates, has also signed a binding Heads of Agreement (HOA) with PETRONAS for the purchase of 3 MTPA of LNG for 20 years sourced primarily from the Pacific Northwest LNG project. The 3 MTPA sale and purchase is in addition to the 1.8 MTPA of equity LNG offtake, making SINOPEC one of the largest LNG buyers from PETRONAS' portfolio. The transaction is subject to approval by the Chinese authority.
This transaction builds upon the two previously announced transactions in 2013 that saw JAPEX Montney Ltd. acquire a 10 percent interest, PetroleumBRUNEI acquire a 3 percent interest in the project and the recent announcement on the acquisition of a 10 percent interest by Indian Oil Corporation Ltd. Following the closing of the Indian Oil Corporation Ltd. and SINOPEC acquisitions, PETRONAS will hold 62 percent of the integrated project and will continue to work with potential customers and partners to secure markets for LNG.
SINOPEC is the fourth partner in a consortium of LNG buyers which PETRONAS is bringing to the British Columbia LNG export project. Each of the partners will offtake a volume of LNG pro-rata to their upstream and downstream equity interest in the project.
"We are pleased to conclude the addition of another Pacific Rim market and investment into British Columbia which continues to highlight the attractiveness of Canadian natural gas," said Michael Culbert, President & CEO of Progress Energy, of Calgary.
"Our energy export sector continues to gain momentum with this transaction and the addition of a fourth investor," added Greg Kist, President of Pacific NorthWest LNG, of Vancouver.
About Progress Energy Canada
Progress Energy Canada, a leader in Canadian natural gas development, is building upon its history of performance excellence in North America to pioneer new infrastructure for delivering LNG to Pacific Rim markets. Producing more than 400 million cubic feet equivalent of natural gas per day in northeast British Columbia and northwest Alberta, Progress Energy is serving Canadian markets and ambitiously expanding productive capacity on its extensive Montney land holdings in preparation for the opening of new LNG markets in Asia. Progress Energy is wholly owned by PETRONAS of Malaysia, a global leader in LNG and the majority owner of Vancouver-based Pacific NorthWest LNG Ltd. Progress and Pacific NorthWest LNG are helping craft a bright new future for Canada's energy exports.
About Pacific NorthWest LNG
Pacific NorthWest LNG is planning to build a world-scale LNG export facility on Canada's West Coast at Lelu Island near Prince Rupert, British Columbia. The proposed facility will comprise an initial development of two LNG trains of approximately 6 million tonnes per annum (MTPA) each and a subsequent development of a third train of approximately 6 MTPA. The proposed facility would liquefy and export natural gas produced by Progress Energy Canada in northeastern British Columbia. Pacific NorthWest LNG is committed to generating new economic and social benefits for the local community and First Nations, British Columbia and Canada in an environmentally safe and sustainable manner. PETRONAS of Malaysia is the majority owner of Pacific NorthWest LNG.
Bank of America Merrill Lynch acted as financial advisor and Norton Rose Calgary acted as legal advisor to PETRONAS in connection with the transaction.