Malaysia’s Petronas close to inking Canadian shale gas assets deal with an Indian firm

Petroliam Nasional Berhad (Petronas) is close to selling a 25-per cent stake in its Canadian shale gas assets to an Indian company, the Malaysian state-owned energy giant's president and chief executive, Shamsul Azhar Abbas, yesterday said at the LNG Supplies for Asian Markets conference.

Abbas did not name the Indian company, or at what price the assets are being sold, but said that the deal will be announced next week.

In December 2012 Petronas' Canadian subsidiary, Petronas Carigali Canada Ltd, had acquired Calgary-based Progress Energy for $5.4 billion in a in a high-profile transaction that had been initially blocked by the Canadian government. (See: Malaysia's Petronas to buy Canada's Progress Energy for $5.4bn)

Petronas, one of the world's largest producers and shippers of supercooled LNG fuel, needs money to fund its proposed $20 billion Pacific Northwest LNG project, which will liquefy and export natural gas produced by its gas fields in Montney region and northwest Alberta to energy starving Asian nations.

It is said to have already invested between $9 billion-$11 billion in the LNG project, comprising two plants with an annual capacity of 6 metric tons each and is investing another $5 billion on a 750-km pipeline, which will supply natural gas from the production fields to the two plants.

Petronas has been trying to offload 50 per cent of the company in order to fund this project and the company's vice president global LNG Adnal Zainal Abidin told reporters early 2013, ''We are talking to several possible partners as we want to share our project risk."

Since then, Petronas sold 10-per cent stake in the LNG project and a 10-per cent stake in a shale gas field in the North Montney in March 2013 to Tokyo-based Japan Petroleum Exploration and in December 2013 sold a 3 per cent to Petroleum Brunei.

Petronas did not disclose the financial terms of both the transactions.

Several reports in July 2013 indicated that state-owned Indian Oil Corp (IOC) is in early stage talks to buy a 10-per cent stake in the Canadian shale gas assets of Petronas. (See: Indian Oil in talks to buy Petronas Canadian shale gas assets)

Petronas has also offered IOC a long-term LNG offtake at an attractive price from its LNG project.

It is not known whether Petronas has approached other Indian state-owned energy companies like ONGC, Oil India, BPCL and GAIL.