China's state-owned Sinopec is said to be in talks with US-based Apache Corporation to acquire a stake in a $15-billion natural gas export project in British Columbia.
Chevron and Apache each currently own a 50% stake in the Kitimat liquefied natural gas (LNG) project to export natural gas from British Columbia to Asia, and Sinopec’s potential acquisition of a stake in this could help offset some of the costs.
The Kitimat LNG project includes an LNG processing plant, pipelines and 644,000 acres of untapped shale resources on the coast of northern British Columbia. The project is expected to begin exporting natural gas from the Horn River and Liard fields in British Columbia by 2017, and has a license to export 10 million tons of LNG annually.
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Apache will operate the project’s upstream assets, while Chevron will control the downstream. Apache earlier this year paid $150 million to raise its stake in the project from 40% to 50%.
Sinopec’s potential foray into this project is said to be fortuitous for Chevron and Apache, which are struggling with soaring project costs that are now over $15 billion—or $3 billion more than initial estimates.
Beyond contributing to project costs, Sinopec’s inclusion in Kitimat LNG could also provide another Asian buyer for British Columbian natural gas.
China is seeking to double its share of natural gas in the energy equation to 10%, and reported talks over Kitimat LNG are in line with this goal.
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Earlier this month, the Canadian subsidiary of China’s CNOOC was awarded exclusive rights to proceed with a proposed terminal to export LNG from the Pacific coast.
Last month, Apache struck a deal with Sinopec to sell a one-third stake in its Egypt oil-and-gas business for $3.1 billion.
By. Joao Peixe of Oilprice.com