Kitimat LNG’s Stake to be Bought by Chevron

Chevron Corp stated on Monday it will enter the Canadian liquefied natural gas business with the purchase of the 50 percent stake in the Kitimat LNG task held by Encana Corp and EOG Resources Inc.

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Chevron will take Encana’s and EOG’s 30 percent stakes in the LNG-export project for a confidential price as the No. 2 USA oil company wants to start Northern American gas exports.

It will additionally buy the two business’ interest in a pipeline serving the project, at Kitimat, 650 kilometers north of Vancouver, and will pay $ 550 million for a half stake in 644,000 acres of expedition lands in the Horn River and Liard shale-gas fields had by Apache Corp.

Apache will then pay Chevron $ 150 million to raise its stake in the British Columbia job and linked lands to 50 percent, netting the UNITED STATE independent oil and gas producer $ 400 million from the deal.

Kitimat LNG's Stake to be Bought by Chevron

Kitimat LNG’s Stake to be Bought by Chevron

Analysts say the addition of a deep-pocketed partner increases the probability that the multi-billion dollar Kitimat LNG– the most enhanced of a handful of gas-export amenities slated for British Columbia’s north coast– will be finished.

“With Chevron included it will occur quicker than it otherwise would have,” said Michael Dunn, an analyst with FirstEnergy Capital.

Though no rate was given, Robert Morris, an expert with Citi Studio, estimates that Encana and EOG each obtained about $ 450 million for their stakes and the expedition lands.

Kitimat LNG was last year granted Canada’s first LNG export license by the National Energy Board, enabling it to export 10 million heaps of LNG per year. The project is slated to begin delivering gas to Eastern markets by 2017.

Other Canadian LNG centers are prepared by Royal Dutch Shell Plc, Malaysia’s Petronas, BG Group Plc and others, making British Columbia an opponent to the UNITED STATE Gulf coastline, where nine jobs have actually been revealed and one, Cheniere Energy Inc’s, Sabine Pass job, is currently under construction.

Chevron has existing LNG tasks in Australia, Africa and South America. Including the Canadian operation will let it tap high-priced export markets and escape a residential gas market that continues to be disheartened since of burgeoning production from shale gas areas.

“This investment expands our worldwide LNG profile and develops upon our LNG building, operations and marketing capabilities,” George Kirkland, Chevron’s vice chairman, said in a declaration. “It is preferably located to satisfy rapidly expanding need for trusted, protected, and cleaner-burning fuels in Asia, which are projected to about double from current levels by 2025.”.

Encana said the sale of its stake was consistent with its plan to focus on its core natural gas company and that the bargain will decrease its future capital dedications while EOG will now concentrate on USA crude oil manufacturing.

The purchase is anticipated to close it the first quarter of 2013.

Chevron shares fell $ 1.00 to $ 108.71 by early afternoon on the New York Stock Exchange while Apache fell $ 1.35 to $ 78.65 and EOG dropped 72 cents to $ 122.83.

Encana shares were down 51 Canadian cents at C$ 19.62 on the Toronto Stock Exchange.

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