A coalition of Asian companies has joined Anglo-Dutch energy giant Royal Dutch Shell in an unprecedented joint venture to exploit natural gas resources in Western Canada.
Public oil-and-gas producer PetroChina (NYSE: PTR), South Korean state-owned gas importer Kogas and Japanese conglomerate Mitsubishi Corp. (Tokyo: 8058) have signed an agreement with multinational Royal Dutch Shell PLC (London: RDSA) to develop a gas extraction facility in British Columbia, the companies said Wednesday.
The project, codenamed LNG Canada, will develop a plant capable of exporting 12 million tons of liquefied natural gas per year, Shell said in a statement. It will involve the largest investment ever undertaken in that Canadian province, British Columbia's Energy Minister, Rich Coleman, said.
Coleman said the project is expected to contribute $1 billion a year to the Canadian Treasury and create 9,000 jobs, according to the Vancouver Sun. While the companies involved in the project have not revealed specific costs, Coleman also said he understands the plant would have a cost of at least $12 billion.
Shell will hold a 40 percent interest in the project. Its Asian partners will have stakes of 20 percent each.
Depressed prices for natural gas futures, which have caused producers to sell the energy commodity at a loss in recent months, have dampened the appetite for exploration in many parts of the world. But expecting prices to go up on unabated demand in the near future, large companies with deep pockets -- and sometimes very profitable oil-based operations -- have been putting money into securing future supplies.
Asian companies have been especially keen on grabbing exploratory stakes, given the expected boom in energy demand seen in that continent as the decade progresses. Australia, for example, has seen hundreds of billions of dollars put into natural gas investments there in recent years.
Due to their close relationship with their national governments, they have also seen their business ventures as promoting geopolitical goals.
PetroChina is very confident in the future of the LNG Canada project. This project will contribute to a further strengthening of trade relationships between China and Canada, Bo Qiliang, vice president of PetroChina, said in a statement.