Just three days after Petronas and Progress Energy Resources Corp. (TSX:PRQ) announced they were moving ahead with a $9 billion to $11 billion liquefied natural gas plant in Kitimat and promised to increase its output 60% if the federal government approved a previously rejected takeover of Progress by Petrona, Ottawa did just that.
Prime Minister Stephen Harper announced Friday his government will approve two foreign takeovers of Canadian energy companies. Both are significant for B.C. because they are directly involved in B.C.'s nascent LNG industry.
Harper approved a $15 billion takeover of Nexen Inc. (TSX:NXY) by the Chinese state-owned energy company CNOOC Ltd., as well as the $6 billion bid by Petronas, Malaysia's state-owned energy company, to buy Progress.
The Petronas-Progress takeover has the biggest implication for B.C., because it will allow Petronas – already a major player in the LNG business in Asia – to increase its planned exports of B.C. LNG by 60%.
But the CNOOC-Nexen bid also has implications for B.C., because Nexen has significant shale gas holdings in B.C. and has partnered with a Japanese company to develop its B.C. shale assets specifically for the LNG industry.
Nexen holds 300,000 acres of property in the Horn River, Cordova and Liard basins in northern B.C. Earlier this year, a consortium of Japanese companies with expertise in LNG took a 40% interest in Nexen's B.C. shale gas holdings with the intention of developing the plays for LNG exports.
Progress last week announced a joint-venture plan to build a two-train LNG plant in Prince Rupert was moving ahead and gave the project a name: Pacific Northwest LNG.
The plant would be designed to produce 7.6 million tonnes of liquefied natural gas per year. But Petronas and Progress said those exports could be increased 60% to 12 million tonnes annually, if the takeover were approved.
"The province of British Columbia is pleased to hear about this decision and we support the direction the federal government has taken today with respect to CNOOC and Petronas' bids to invest in British Columbia," B.C. Energy, Mines and Gas Minister Rich Coleman said.
"The Petronas and Progress LNG project could create up to 3,500 construction jobs and 300 long-term operational positions."
