LNG

PetroChina, the Chinese oil and gas major listed in Hong Kong and with LNG stakes in Canada and Mozambique, reported an 8.4 percent rise in first-quarter revenues and a return to profits after losses in the same three months of 2020, as it also completed the hand-over of control of the Dalian LNG terminal to the new state-owned energy infrastructure company.

SK E&S, a leading South Korean LNG operator and utility company, has sold its entire stake in a Chinese private natural gas company to improve its own finances amid the demand and prices drop in the energy industry.

The energy unit of SK Group said it sold all of its remaining 10.25 percent stake, amounting to 535 million shares, in China Gas Holdings through a block deal on the Hong Kong Stock Exchange, according to a regulatory filing.

The sale price was 1.80 trillion South Korean won (US$1.47 billion).

China Gas is the largest independent Chinese city-gas distributor and owner of over 550 filling stations for gas-powered vehicles.

The Chinese company has been in a partnership with Kunlun Energy, a subsidiary of LNG importer PetroChina, to connect households and businesses to city gas in China’s northeast provinces.

SK E&S said the move to sell the Chinese shares was aimed at improving its own financial structure as it also increases its energy investments in Australia.

It had previously sold a 3.3 percent stake in China Gas in September 2019 for 786.8 billion won. Currently, only its subsidiaries own stakes in CGH, totaling 1.45 percent.

The company is a unit of the SK Group, the third-largest conglomerate in South Korea, and a competitor to Korea Gas Corp, the largest LNG importer.

SK E&S, which has booked volumes from Freeport LNG in Texas, also has capacity at two South Korean import terminals, the Boryeong and Kwangyang facilities.

It is additionally a shareholder in the Barossa natural gas field development in Australia’s Northern Territory that will provide feed-gas for the Darwin LNG export plant at Wickham Point.

The shareholdings for that venture and Darwin LNG have changed after ConocoPhillips agreed to sell its Northern Australian assets to Adelaide-based energy and LNG player Santos.

Santos has signed agreement to sell a 25 percent interest in Darwin LNG to SK E&S.

It also sold a 12.5 percent interest in the Barossa filed development to the largest Japanese LNG importer, JERA Co. Inc.

China Gas Holdings, the largest independent Chinese city-gas distributor and owner of 555 filling stations for gas-powered vehicles, posted a surge in fiscal first-half net profits and had over US$3.5 billion in revenues as Beijing’s “Blue Skies” anti-pollution policies helped increase natural gas use and LNG imports.

Pacific Oil & Gas, the Asian-based developer of the Canadian Woodfibre LNG export project in British Columbia, is buying Canbriam Energy, a producer of natural gas in the Montney Shale basin of northeast BC.

Pacific Oil & Gas is a subsidiary of the Royal Golden Eagle group of Indonesian businessman Sukanto Tanoto and whose headquarters are in Singapore.

The Asian and Canadian companies said the Canbriam transaction would create a well-capitalized entity able to grow from its current production of about 200 million cubic feet per day of natural gas, including 6,000 barrels per day of associated natural gas liquids.

The Woodfibre liquefaction and export plant is being built on the site of a former pulp mill at Squamish, north of Vancouver, and is licensed to export more than 2 million tonnes per annum of LNG.

The relatively small-scale Canadian LNG project is expected to start commercial operations by about 2023.

The PO&G purchase of Canbriam includes its natural gas processing plants and water-handling infrastructure to support natural gas pipeline transportation.

“Canada has the opportunity to become a leader in the global energy transition,” said Ratnesh Bedi, President of PO&G.

“Canbriam is one of the lowest cost producers in the Montney and we welcome the opportunity to work in Canada and produce some of the cleanest natural gas,” added Bedi.

Paul Myers, Canbriam’s President and Chief Executive, welcomed his company’s sale to such an experienced energy player.

“This transaction supports ongoing development of our prolific Montney assets and aligns us for future natural gas exports. We warmly welcome Pacific Oil & Gas as our new owner,” stated Myers.

The Woodfibre LNG project is one of the few moving forward on the Canadian West Coast where more than a dozen were previously planned.

Woodfibre owner PO&G also has LNG import assets in China. It holds a 35 percent stake in the Rudong LNG import terminal in China's eastern Jiangsu Province, with 55 percent held by Kunlun Energy, a Hong Kong-listed subsidiary of PetroChina.

PetroChina itself is an investor in the largest LNG export project moving forward in BC, the LNG Canada joint venture with 20 MTPA of initial output led by Royal Dutch Shell and with other stakeholders including Mitsubishi Corp. of Japan and Korea Gas Corp.

The closing of the Canbriam transaction is expected to occur before July 2019.

Macquarie Capital Markets Canada is the acting financial advisor to PO&G and Bennett Jones is acting as legal counsel.

RBC Capital Markets is the advisor to Canbriam and Norton Rose Fulbright Canada is giving legal counsel.

Kunlun Energy Co., a subsidiary of PetroChina, plans to sell upstream assets and may buy an LNG import terminal in northern China to go with the two it already operates and to expand its city-gas distribution business.