Indian Oil Corporation (IOC), one of the country's largest oil firm, on Friday official announced that its wholly affiliated company, IndOil Montney limited, has signed a deal to buy a 10 per cent stake in shale-gas assets and a linked liquefied natural gas (lNG) project in British Columbia for $ 900 million.
IOC would acquire stake in Petroliam Nasional Berhad's Canadian subsidiary, Progress Energy Resources Corp's shale gas assets and Pacific NorthWest lNG for 1 billion Canadian dollars or approximately $ 900 million. With this deal, IOC for the first time has entered into the North American market.
Announcing the deal, Petronas in its statement said, "As part of the transaction, IOC has also agreed to offtake 1.2 million tons of liquefied natural gas (lNG) per annum, which represents 10 per cent of the lNG facility's production, for a minimum period of 20 years."
Commenting on the deal, IOC in its statement said the acquisition would give the company an "opportunity to be part of a world class large-scale resource play and greenfield lNG development in a stable Canadian regime." IOC's Chairman RS Butola in the statement said, "This transaction provides an excellent opportunity for IOC to secure upstream participation in the highly prospective Montney play in Canada, along with securing long-term lNG supply for India's growing gas requirements."
The 1.2 million tonnes per annum of lNG from the Canadian project "will partly meet the requirement of IOC's upcoming 5 million tonnes per annum Ennore import terminal in Tamil Nadu," statement added.
IOC, which had previously ventured into overseas oil and gas exploration and production with state-owned explorer Oil India ltd, went for the Petronas deal on its own. Company officials said IOC has lined up a $ 900 million one-year bridge loan from a group of banks to fund the purchase of a stake in Petronas's Canadian gas projects.
The Canadian asset is expected to produce as much as 19.68 million tonnes of lNG per year for the next 25 years starting in 2018. Progress Energy has more than 1.9 trillion cubic feet of proved and probable gas reserves in British Columbia.
Petronas, through its wholly-owned subsidiary Petronas International Corp, had in 2011 bought Canada's Progress Energy Resources Corp in a 5.2 billion Canadian dollars deal to get the Altares, lily and Kahta shale gas assets in north-eastern British Columbia.
In March 2013, it sold a 10 per cent stake in the integrated shale gas development and lNG project to Japan Petroleum Exploration Co (Japex) and another 3 per cent to Petroleum Brunei. After the transaction with IOC, Petronas will hold 77 per cent of the integrated project, the statement said.