The Canadian federal government's rejection of Malaysian state-owned Petronas' proposed $5.2 billion takeover bid of Canada's Progress Energy could have dramatic consequences for Prince Rupert.
Petronas Carigali Canada — a division of the Malaysian oil and gas giant — has actively been pursuing a liquid natural gas export site on Lelu Island. However, the decision to reject the deal — announced by Industry Minister Christian Paradis late Friday night — casts doubts on the project but not a death blow.
Paradis said in his announcement that the government did not see a "net benefit" for Canada in the deal.
In a statement issued early Monday, Petronas said, they along with Progress Energy Resources Corp. officials, will meet with Industry Canada to question the decision. The company has 30 days to appeal the decision.
“Petronas and Progress will work together to ensure that the minister has the necessary information to determine that the proposed acquisition of Progress would likely be of net benefit to Canada."
Tessa Gill, head of stakeholder management for the company's Prince Rupert LNG export project, had said the company had plans, once government regulatory reviews are complete, to obtain initial construction permits in early 2014 and make the final investment decision which would pave the way to construction later that same year and the first deliveries to begin in 2018.
Gill said the LNG project was expected to create 3,000 to 3,500 direct and indirect jobs during peak construction and 200-300 during operation.
However, the entire project hinged on the federal decision whether or not Petronas could proceed with its multi-billion-dollar takeover of Canadian-owned Progress Energy which has substantial natural gas holdings in northeast B.C.
The project called for those natural gas reserves to be piped to Prince Rupert where Gill said the company would develop two LNG trains, a term used to describe a liquid natural gas plant's liquefaction and purification facilities, at the Lelu Island site. The trains, which receive raw natural gas through the pipeline, purifies, condenses and cools the gas down to -160C for shipping.
The Globe and Mail reported that Finance Minister Jim Flaherty said on Sunday the Petronas-Progress deal is not dead.
“There’s another period of time during which they can continue to have discussions and try to satisfy the concerns that the Department of Industry has,” Mr. Flaherty told CTV’s Question Period.
Given the decision, it is uncertain if Petronas Carigali will go ahead with public open houses on Nov. 5 in Port Edward at the community school and Nov. 6 in Prince Rupert at the Lester Centre.
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