Three of the largest asset management firms are competing for Shell’s interest in the LNG Canada project, with price tag estimates ranging between $10 billion and $15 billion, Reuters reported, citing unnamed sources familiar with the matter.
KKR, Apollo Management, and Blackstone are vying for a portion of Shell’s 40% stake in LNG Canada, which is the first North American export facility for the superchilled fuel with access to the Pacific, Reuters noted, making it well-positioned to supply the Asian market.
The report on the potential stake sale follows the news that Shell struck a deal to acquire Canadian ARC Resources for $16.4 billion. The deal gives the supermajor access to roughly 2 billion barrels of reserves while bolstering supply feeding LNG Canada. With ARC’s assets adjoining Shell’s Canadian operations that feed LNG Canada, the deal boosts Shell’s LNG supply position while also replenishing reserves.
Backed by Shell, Petronas, PetroChina, Mitsubishi, and Kogas, LNG Canada, in Kitimat, British Columbia, will eventually ramp up to 14 million tonnes per annum. That capacity is expected to redirect a portion of Canadian gas exports, currently flowing almost entirely to the U.S., toward global markets. The price tag of the project is $40 billion. For now, however, production capacity from the first train of LNG Canada is 5.6 million tons per annum.
The first cargo out of Kitimat set off in July last year. Since then, the terminal has been ramping up shipments, with the bulk going to South Korea. Although the previous Canadian federal government had claimed there was no business case for LNG exports, Shell appears to be confident there is, and the investment it and its partners have made in LNG Canada seems to be proof enough that this is the case.
Now, three of the world’s largest asset managers have signaled they share the perception that there is a business case for liquefied gas exports from Canada.
By Irina Slav for Oilprice.com
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