It’s official – Petronas, which pulled the plug on its $36 billion Pacific NorthWest LNG project in 2017 – is back in the LNG game in B.C.
Petronas and LNG Canada have confirmed earlier reports that Petronas would take an equity stake in the $40 billion LNG Canada project.
Earlier this month, B.C. Energy, Mines and Petroleum Resources Minister Michelle Mungall let it slip in an interview with Business in Vancouver that Petronas would join the LNG consortium.
Petronas plans to take a 25% stake in the LNG Canada project in Kitimat, to become the second-largest stakeholder.
Shell, the lead partner, is reducing its stake from 50% to 40%. PetroChina Canada Ltd. will hold 15%, Diamond LNG Canada Ltd., a subsidiary of Mitsubishi will hold 15%, and Kogas Canada LNG Ltd. will have 5%.
“Petronas is in Canada for the long-term and we are exploring a number of business opportunities that will allow us to increase our production and accelerate the monetization of our world-class resources in the North Montney,” Petronas CEO Tan Sri Wan Zulkiflee Wan Ariffin said in a news release.” LNG is just one of those opportunities.”
The buy-in is still subject to various regulatory approvals, and will take a few months to be finalized.
"The transaction announced today does not amount to an FID (final investment decision) which remains pending," Shell Canada said in a news release. "The timing and outcome of an FID will be decided by joint venture participants based on global energy markets, and the overall competitiveness and affordability of the project."
One outstanding hurdle for the project to clear are 45% duties Canada slapped on fabricated steel products from China, South Korea and Spain. LNG Canada and Woodfibre LNG have both stated that Canada does not have the expertise to build the large LNG modules needed to chill natural gas gas to below 160 below Celsius, and have appealed to the federal government for exemptions.
A final investment decision on the $40 billion LNG plant and the associated Coastal GasLink pipeline, are expected this year. LNG Canada CEO Andy Caltiz has twice this year confirmed plans are to start construction this year.
When Petronas announced last year that it was cancelling its $36 billion LNG project in Prince Rupert, the company said that didn’t mean it was divesting entirely from Canada. The company held onto its significant upstream assets in northeastern B.C. – assets acquired when the Malaysian energy company acquired Alberta’s Progress Energy for $5 billion.