Indian Oil Corp. has agreed to buy a 10% stake in Petronas' Canadian natural gas fields and a planned export project.
The agreement with Petronas will also give the Indian state oil refiner the right to 1.2 million metric tons of LNG per year for two decades, New Delhi-based Indian Oil said in a stock exchange filing. It didn’t give a value for the deal. The company lined up a $900 million one-year bridge loan to fund the purchase, three people familiar with the matter said last month.
The acquisition gives Indian Oil access to at least 8.35 Tcf of gas reserves in British Columbia fields controlled by Petronas’ Progress Energy Canada Ltd. unit, Indian Oil said. India’s proven gas reserves at the end of 2012 were 43.8 Tcf, according to BP Plc data.
Indian Oil follows rivals including Oil & Natural Gas Corp. and GAIL India Ltd. in securing energy supplies through overseas acquisitions to meet surging demand at home. Petronas is seeking to bolster its finances to fund a record 300 billion ringgit ($92 billion) spending plan to replenish Malaysia’s diminishing reserves and has embarked on a worldwide review of its portfolio since CEO Shamsul Azhar Abbas took over four years ago.
Indian Oil shares rose 1.1% to 267.25 rupees in Mumbai trading today compared with the 1.9% gain in the benchmark S&P BSE Sensex. The deal was announced after the close of trading.
Petronas acquired control of the project through its C$5.2 billion ($4.7 billion) takeover of Canada’s Progress Energy in 2012, making it the second-biggest shareholder in British Columbia’s Montney shale gas area. The Kuala Lumpur-based company aims to reduce its share in Pacific NorthWest LNG, which runs a gas-export facility, to as low as 50% by selling stakes to Asian gas buyers, the unit’s president, Greg Kist, said in November.
Japan Petroleum Exploration Co. bought a 10% stake in the project last year. The LNG export project, with an estimated price tag of C$9 billion to C$11 billion, will produce as much as 19.68 million metric tons of LNG a year for 25 years starting in 2018, according to an application to Canada’s National Energy Board.
Petronas’s plans to sell another 15% stake in the project to another Asian LNG purchaser will be announced by the end of this month, Shamsul said March 4.
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