This summer, Malaysian state-owned oil company Petroliam Nasional Bhd. (Petronas) offered to buy Canada’s Progress Energy Resources Corp. (TSX: PRQ) for C$5.18 billion ($5.21 billion).
Following on its heels was a similar proposal by Chinese CNOOC Ltd. (HKG: 0883) to purchase Nexen Inc. (TSX: NXY) for $15.1 billion.
Now, almost six months later, both deals are on hold awaiting approval from a stubborn Canadian government.
The Petronas and Progress Energy deal was rejected two months ago by Industry Minister Christian Paradis, who left the door open for a resubmission of the proposal. But he had determined that in its original form, the project was not of “net benefit” to Canada and the economy.
But the two companies had also planned an LNG terminal to export gas to Asia from British Columbia. Despite the setback, they moved forward with a feasibility study on the project, which they recently completed.
And now they’re pressing ahead with the next phase.
Petronas and Progress announced Tuesday that their Pacific Northwest LNG project would move into the pre front-end engineering design phase (pre-FEED). The companies are hopeful that approval for their tie-up will go through, but they plan to continue with the LNG project regardless of what happens.
The Pacific Northwest LNG project terminal will be located in British Columbia, aiming to take advantage of the low North American natural gas prices resulting from the shale boom and the high demand for cheap LNG from Asian nations.
It’s expected to cost between C$9 billion ($9.06 billion) and C$11 billion ($11.08 billion) and export roughly 3.8 million short tons annually.
According to MarketWatch, however, an approval of the tie-up would bump capacity up to 6 million short tons a year.
The project would create 3,500 construction jobs and 200 and 300 permanent jobs once the facility opens. Petronas and Progress expect a final investment decision by 2014 and exports by 2018.
From the Star:
“We’ll be moving forward with the project description, which initiates the environmental assessment process and within that, we’ll have the ability to adjust as we move forward,” [Progress CEO Michael] Culbert said.
As is, the facility would have access to 20% of Progress’ stake in the North Montney shale. With the takeover, however, this would go up to 100%.
Progress and Petronas hope to file for regulatory approval on the project by early 2013.
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The new LNG facility will not be the only one in Canada. Kitimat LNG, also in British Columbia, is in preparation for development and will begin exporting first.
In the U.S., export facility approval is not as easy to come by. There is currently only one approved export terminal, under construction in Sabine Pass, Louisiana by Cheniere Energy (NYSE: LNG).
Seven others are awaiting approval. The Department of Energy has said that it will decide on approvals for LNG terminals once an analysis, due out before the end of the year, is published.
That’s all for now,
Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.