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India close to deal for 10 percent of Pacific Northwest LNG venture
India is on the verge of making its entry into Canada’s LNG industry, with two of its state-owned companies expected to pay C$1 billion for a 10 percent stake in the Pacific NorthWest LNG venture controlled by Malaysia’s Petronas.
After years of hints, speculation and expressions of interest, Indian Oil Corp. and Petronet LNG are aiming to conclude a deal towards the end of 2013, sources in the company said.
Pacific NorthWest has already signed on Japan Petroleum Exploration as a 10 percent partner for an undisclosed amount. That transaction will give Japex a role in shale gas assets in northeastern British Columbia and the liquefaction plant to be built at Port Edward, near Prince Rupert on the northern B.C. coast.
Export starting in 2019 So far, Pacific NorthWest has a Canadian National Energy Board permit to export 19.68 million metric tons of LNG a year starting in 2019 and has three international contractors working on the final engineering design.
The Canadian Environmental Assessment Agency has also issued guidelines for public hearings and Pacific NorthWest intends to submit its regulatory application by late 2013.
Pacific NorthWest President Greg Kist said in June that the company’s doors were open to more partners in the $11 billion project.
He said Asia is “our target and clearly Canadian LNG companies have an advantage of reaching out to that market due to shorter sailing times.”
“Historically, LNG producers have favored an oil-indexed pricing like JCC (Japan crude cocktail) but we will establish an acceptable pricing structure as part of negotiations with offtake customers,” he said.
China ruled out as partner Industry sources have ruled out any prospect of Pacific NorthWest selling a stake to Chinese companies if the deal with India falls through because of China’s extensive involvement in the global LNG sector.
Kazakhstan earlier in July blocked India’s plan to buy ConocoPhillips’ stake in the giant Kashgan oil field for $5 billion, with sources predicting China will win the same stake for up to $5.4 billion.
Banking sources say Indian Oil will choose an investment bank advisor soon and expects to make an early announcement on a “long-term attractive offtake” sales contract for Pacific NorthWest.
—Gary Park
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