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Petronas to Complete C$5.2 Billion Progress Deal This Week
Petroliam Nasional Bhd., Malaysia’s state energy company, plans to complete the C$5.2 billion ($5.3 billion) takeover of Progress Energy Resources Corp. (PRQ) on Dec. 12 after winning Canadian approval for the deal.
Following the acquisition, the companies will make a final investment decision on a proposed liquefied natural gas terminal in British Columbia in late 2014, according to a joint statement on their websites. The facility may cost $9 billion to $11 billion, with the exports expected in 2018, they said.
Progress Energy gives Kuala Lumpur-based Petroliam Nasional, known as Petronas, ownership of the second-largest stakeholder in the Montney shale-gas area of British Columbia and full control of the three Progress Energy fields in which Petronas bought a stake last year. A natural gas transmission pipeline is also planned linking the field to the terminal, the companies said.
“These components will create thousands of well-paid jobs during construction of the facility and pipeline, as well as permanent, ongoing operating jobs throughout our LNG business,” Shamsul Azhar Abbas, Petronas’ chief executive officer, said in today’s statement.
Prime Minister Stephen Harper’s government initially rejected the takeover on grounds that it wasn’t deemed to be to Canada’s net benefit. Petronas appealed and made “significant” commitments in areas of governance, transparency, employment and capital investment, according to a Dec. 7 statement by Canada’s industry ministry.
Harper’s government also approved China-owned Cnooc’s Ltd.’s $15.1 billion bid for Nexen Inc. (NXY) The two takeovers tested Harper’s ability to balance the need to bolster economic relations with Asian economies without letting them gain too much influence over the world’s third-largest pool of proven oil reserves.
The acquisition will enable Petronas to secure long-term strategic gas supply and leverage on Progress Energy’s experience in developing unconventional fuel resources, according to today’s joint statement.
“Canada has great potential in the global LNG market,” Michael Culbert, Progress’ chief executive officer said in the statement. “While the LNG trade is intensely competitive, new facilities such as our Pacific Northwest LNG Project are vital to building Canada’s market position.”