Petronas stalled in Canadian takeover

Gary Park

For Petroleum News

Petronas is full steam ahead on one of its Canadian LNG ventures, but sidelined in its ambition to make a possible C$5 billion acquisition.

Anuar Ahmad, executive vice president of the Petronas gas group, said the Malaysian state-owned energy giant’s efforts to take over an unidentified Canadian natural gas producer have stalled.

“There has been no progress on that,” he told a press conference at the World Gas Conference 2012 in Kuala Lumpur.

He offered no further details beyond saying “it would be difficult to mention what deals we are looking at” when asked what might replace the C$5 billion deal.

The setback comes only two months after Petronas indicated it expected to announce a deal within three months.

At the time Shamsul Azhar Abbas, Petronas’ chief executive officer, said “there are quite a few candidates out there willing to talk.”

The assumption was that Petronas, in going public ahead of a transaction, was alerting the Canadian government to its hopes of becoming the largest state-owned foreign enterprise to enter Canada’s LNG sector.

However, partners in a Petronas and Progress Energy Resources LNG venture have confirmed they are on track for a sanctioning decision in 2014 and possible startup in 2018.

Last year Petronas paid C$1.07 billion for a 50 percent stake in 150,000 acres of Progress shale properties in British Columbia’s North Montney play and 80 percent ownership of a planned LNG export terminal on the Pacific coast.

Ahmad said Petronas is talking to some parties who are interested in joining the project, again without elaborating.

“We’ve narrowed our site selection down to four sites in the Kitimat and Prince Rupert areas and we’re currently negotiating on our two primary selected sites,” Progress Chief Executive Officer Mike Culbert said in a webcast from a New York conference.

“With Petronas’ expertise in LNG we’re also moving along on the off-take customer discussions in a very robust manner as well,” he said.

Ahmad said Petronas plans to sell its LNG exports at prices linked to crude oil.

Culbert said the partners will spend about C$350 million this year to develop the joint venture land, which started initial deliveries in late May at 22 million cubic feet per day, regardless of a Progress decision to cut its 2012 capital budget by C$200 million and shut-in 10-15 percent of its gas production because of poor North American prices.

He said discussions are under way with companies capable of building a 300-mile pipeline from North Montney to the coast.