Sinopec to acquire 15% stake in Petronas Canadian LNG project

China Petrochemical Corporation (Sinopec) and its partner China Huadian have agreed to purchase liquefied natural gas (LNG) from a Canada-based LNG project operated by Malaysian oil and gas firm Petronas.

Under the deal, Sinopec and its Chinese partner will acquire a 15% stake in the Pacific Northwest LNG project, which will allow them to offtake 1.8 million tonnes of LNG annually for 20 years. Sinopec will have a 10% and China Huaidan a 5% interest.

Sinopec, through its affiliates, has also signed a binding heads of agreement with Petronas for the purchase of 3 million tonnes of LNG a year for 20 years. The company will acquire the equity in both upstream assets and downstream facilities, and secure an equivalent volume of LNG offtake.

Sinopec said that it will supply the total volume to the receiving terminals under expansion or construction in the future. It 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 are required to offtake a volume of LNG pro-rata to their upstream and downstream equity stake in the project.
The project is located on Canada’s west coast near Prince Rupert, British Columbia, with natural gas sourced from Progress Energy Canada’s North Montney assets.

The proposed facility will feature an initial development of two LNG trains of about 6 million tonnes a year each. The first two trains are anticipated to start operations by 2018 or early 2019, and the project also includes the development of a third train.