Chinese energy giant PetroChina (NYSE:PTR) closed a deal to buy US$41 billion worth of Australian liquefied natural gas over the next 20 years. The gas will come from Exxon Mobil Corp.’s (NYSE:XOM) 25% share of the Gorgon gas field development off Australia’s west coast. Exxon Mobil recently announced a “world class” discovery in their Horn River project located in northeast British Columbia reporting initial flow rates of 16 to 18 Mcf/day on three horizontal wells. Exxon Mobil has stated that the Horn River project will be a major asset for them.
Given China’s growing appetite for energy, and their efforts to reduce carbon emissions, the Chinese have looked towards natural gas as a practical energy solution. The Chinese have not hesitated in cutting deals with anyone that has the resources they are seeking to acquire. PetroChina is building or planning LNG terminals (for importing LNG) at Dalian in Liaoning province, Rudong in Jiangsu province, Tangshan in Hebei province, and Shenzhen in Guangdong.
Meanwhile, Kitimat LNG has been doing all the right things in putting together LNG buyers and natural gas suppliers for their LNG processing plant in Kitimat, British Columbia. Committed buyers include Korea Gas Corp, and Gas Natural of Spain, while committed natural gas suppliers include EOG Resources and Apache Corp. So it seems logical that Exxon Mobil (supplier) and PetroChina (LNG buyer) should be next to close deals with Kitimat LNG. Following preview agreements, PetroChina would likely be given an equity option in Kitimat LNG. Note: Finance Minister Jim Flaherty invited Chinese investment in the Canadian energy sector (see Calgary Herald: “Flaherty urges China to buy Canada”)
Wall Street Journal: “PetroChina Signs LNG Deal with Exxon”
