Progress Energy Canada Ltd. (Progress Energy), Pacific NorthWest LNG Ltd. (PNW LNG) and Petroliam Nasional Berhad (PETRONAS) have signed transaction agreements whereby China Petrochemical Corporation (SINOPEC), through its affiliates, will acquire a 15 percent interest in Progress Energy's LNG-destined natural gas reserves in northeast British Columbia and in the proposed PNW LNG export facility on Canada's West Coast. As part of the transaction, SINOPEC has agreed to offtake 1.8 million tonnes of LNG per annum (MTPA), which represents a pro-rata 15 percent of the LNG facility's production, for a minimum period of 20 years.
In addition to the transaction, SINOPEC, through its affiliates, has also signed a binding Heads of Agreement (HOA) with PETRONAS for the purchase of 3 MTPA of LNG for 20 years sourced primarily from the Pacific Northwest LNG project. The 3 MTPA sale and purchase is in addition to the 1.8 MTPA of equity LNG offtake, making SINOPEC one of the largest LNG buyers from PETRONAS' portfolio. The transaction is subject to approval by the Chinese authority.
This transaction builds upon the two previously announced transactions in 2013 that saw JAPEX Montney Ltd. acquire a 10 percent interest, PetroleumBRUNEI acquire a 3 percent interest in the project and the recent announcement on the acquisition of a 10 percent interest by Indian Oil Corporation Ltd. Following the closing of the Indian Oil Corporation Ltd. and SINOPEC acquisitions, PETRONAS will hold 62 percent of the integrated project and will continue to work with potential customers and partners to secure markets for LNG.
SINOPEC is the fourth partner in a consortium of LNG buyers which PETRONAS is bringing to the British Columbia LNG export project. Each of the partners will offtake a volume of LNG pro-rata to their upstream and downstream equity interest in the project.
"We are pleased to conclude the addition of another Pacific Rim market and investment into British Columbia which continues to highlight the attractiveness of Canadian natural gas," said Michael Culbert, President & CEO of Progress Energy, of Calgary.
"Our energy export sector continues to gain momentum with this transaction and the addition of a fourth investor," added Greg Kist, President of Pacific NorthWest LNG, of Vancouver.