B.C. Benefits Most From Petronas Deal

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BC natural gas | BCBusiness
Image by: Ari Moore
While the approval of the Nexen takeover has received more press attention, B.C. will gain the most from the Progress-Petronas deal.

Yes, that approval of the $15-billion Nexen takeover by a Chinese state-owned company certainly warranted attention. But far more important to B.C. was an approval for a smaller deal involving natural gas.

You don’t usually hear this from me, but I think that was a pretty deft play that Prime Minister Stephen Harper pulled off recently when he approved a Chinese takeover of Calgary-based oil producer Nexen Inc.

Not only did he placate the oil patch hawks who’d like to cash in their shares by selling the entire oil patch to big, deep-pocketed, offshore companies, he also soothed nationalists who opposed any such sale to foreign state-owned companies.

More important to B.C., however, is that he also approved the sale of gas producer Progress Energy Resources Corp. to Malaysian company Petronas.

That paves the way for a liquified natural gas port on the West Coast that would carry B.C.’s natural gas to Asia.

I don’t know if the proposed oil pipeline from Alberta’s oilsands — and, presumably, Nexen oil would have been on it — across B.C. to the Pacific will ever happen. Personally, I don’t think it will.

But a gas pipeline is another story. Although it’s not perfect, natural gas is far better for the environment than oilsands oil and is far less dangerous if there should be some kind of spill.

When shipped to Asia, it would also help B.C. gas producers beat the glut in North America that has lowered prices to the point where it’s silly to produce natural gas.

There are several countries in Asia who desperately want gas to power their growth, so the prices there are much higher.

This Petronas decision raises the “what’s not to like” response — unless of course you’re a diehard member of the no-fossil-fuels-at-all school of energy management.

Of course Petronas isn’t going to create a natural gas export business by itself. At least two giant energy companies are also exploring the creation of a liquefied natural gas business from B.C.’s coast.

Any such business would require a very large shipping terminal on the coast, and we’re far from that point.

But recent moves like Harper’s Petronas decision certainly give us hope.



Asia Pacific | Mergers & Acquisitions | Opinion

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