Liberated from almost 30 years of having the Canadian government as its largest shareholder, Petro-Canada came roaring out of the gate Sept. 24, trading more than 13 million shares on the New York and Toronto stock exchanges.
But whatever investor interest there was in the Canadian company’s first day as a fully privatized company was overshadowed by speculation that it is on the verge of taking a role in the world’s largest natural gas field.
Quoting an official from the Russian embassy in Canada, the National Post said Petro-Canada was planning a C$3.6 billion investment in Russia’s gigantic Shtokmanovskoye field in the Barents Sea — a possible 100 trillion cubic foot mother lode that is expected to need a US$30 billion investment to develop.
Stoking those fires were subsequent reports that Petro-Canada Chief Executive Officer Ron Brenneman was among a group of industry leaders, including ExxonMobil President Rex Tillerson and ConocoPhillips President and CEO Jim Mulva, who met in New York Sept. 22 with Alexei Miller, chief executive officer of Russian energy powerhouse OAO Gazprom.
ChevronTexaco Chairman and CEO David O’Reilly and Miller had already signed a binding memorandum of understanding that will see the two firms study possible Russian and U.S. oil and gas joint ventures, notably the development of an LNG export project in Russia.
Also on the list is Gazprom’s potential role in a ChevronTexaco-led LNG import terminal facility in North America.
A number of companies interested
Along with ChevronTexaco, ExxonMobil, ConocoPhillips and Petro-Canada, companies that have shown interest in the Shtokmanovskoye field are Royal Dutch/Shell and Norway’s Statoil.
Gazprom has set a target of 2005 to start test deliveries of LNG to the United States in a move that analysts believe could eventually ease tight supplies in North America and soften commodity prices.
In May, Petro-Canada said it was in talks with Gazprom to build a US$1.3 billion LNG plant in Russia that would be capable of producing up to 5 million tonnes a year, with Petro-Canada taking a possible US$600 million stake.
Petro-Canada and TransCanada teamed up in September with joint plans for a C$660 million LNG terminal in Quebec, 270 miles northeast of Montreal, with aims to ship as much as 500 million cubic feet per day of gas to customers in central Canada and the U.S. Northeast and Midwest. The Russian embassy official Anatoly Sementsov emphasized to the National Post that interest in the Barents Sea field is intense, with winning bidders expected to be announced next spring.
Company looking for other LNG sources
In its pursuit of supply sources for LNG, Petro-Canada is also exploring prospects in the Middle East and West Africa.
Although not in the same league as the super majors, Petro-Canada is acquiring a higher global profile with the sale of the government’s 49.4 million shares.
About 70 percent of the offering went to foreigners, by far the bulk to the United States, pushing non-Canadian ownership of the company to about 53 percent from 40 percent.
But, for now, there is no prospect of a Petro-Canada takeover.
Spokesmen for Canada’s Finance Minister Ralph Goodale say the government plans to retain the Petro-Canada Public Participation Act, which prevents anyone from owning more than 20 percent of the company and requires the head office to remain in Calgary.
One official said the legislation, viewed as the equivalent of a poison pill to ward off hostile bids, means Canadians can “continue to benefit from the company’s operations,” after billions of dollars of taxpayers’ money were invested in building Petro-Canada in its early years.
