(Updates with executive comment in eighth paragraph.)
Oct. 7 (Bloomberg) -- Petroliam Nasional Bhd., Malaysia’s state energy company, is pressing ahead with plans to build a liquefied natural gas plant in the Canadian province of British Columbia.
Malaysian Prime Minister Najib Razak hailed the company’s plans, announced last year, at a press conference yesterday with Canadian Prime Minister Stephen Harper in Putrajaya, outside of Kuala Lumpur. “This is a very significant landmark decision by Petronas, done in the wake of our friendly relationship,” Najib said.
Petronas, as Petroliam Nasional is known, completed the C$5.2 billion ($5.1 billion) takeover of Canada’s Progress Energy Resources Corp. in 2012, after Harper’s government initially blocked the deal. Najib confirmed in April that he wrote a letter to his counterpart giving assurances of minimal state interference in the oil and gas group’s daily operations.
“We view Petronas investments very positively, and all the indications I have is that Petronas is looking at further investments,” Harper said yesterday. “The government of Canada is very excited by that possibility as are all those I’ve talked to in the energy sector.”
The acquisition gave the Southeast Asian group ownership of the second-biggest stakeholder in the Montney shale-gas area of British Columbia, and full control of three Progress Energy fields in which Petronas previously held stakes.
The Petronas terminal will be located in Prince Rupert, British Columbia. It’ll process natural gas extracted by Progress Energy and shipped through a pipeline built by TransCanada Corp., according to the project’s website.
Najib reiterated yesterday Petronas will invest C$36 billion to develop the LNG project.
The C$36 billion figure includes Petronas’ cost of acquiring Progress Energy, building the terminal and the pipeline, and completing upstream activities such as drilling wells, said Greg Kist, president of Pacific NorthWest LNG, the Petronas-owned company that will operate the LNG terminal. Shipments are expected to begin in 2018, he said.
“We have not changed course,” Kist said in a telephone interview today from outside Calgary. “We’re certainly very positive about continuing to move this forward, but the final investment decision will be taken at the end of 2014.”
On Aug. 26, Petronas CEO Shamsul Azhar Abbas said it may cut its Progress Energy holding and is talking with potential buyers. The company already agreed in April to sell a stake to Japan Petroleum Exploration Co.
--With assistance from Barry Porter in Kuala Lumpur. Editors: Richard Bravo, Sylvia Wier