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PetroChina to invest $5.4 billion in Canada gas

by Staff Writers
Montreal (AFP) Feb 9, 2011
Chinese oil giant PetroChina will invest 5.4 billion dollars to acquire a 50 percent stake in a shale gas project developed in Canada by Encana, North America's top gas producer, the Canadian group said Wednesday.

Under the deal, PetroChina and Encana would jointly develop the Cutback Ridge fields in British Columbia and Alberta, a 635,000 acre spread with current daily production of 255 million cubic feet of natural gas equivalent (7.22 million cubic meters).

Encana said the fields, in which PetroChina will have a 50-percent interest if the deal goes through, have proved reserves of about one trillion cubic feet (28.3 billion cubic meters) of natural gas equivalent.

Encana CEO Randy Eresman called the agreement a "major milestone" in the Canadian company's developing relationship with PetroChina.

He said the investment would allow Cutback Ridge to be developed at an accelerated pace.

The deal has to be approved by Canadian and Chinese regulatory authorities, and aspects of the agreement still have to be negotiated, the company said.

Encana specializes in the exploitation of unconventional gas deposits in Canada and the United States.

In presenting its third quarter results in October, the company announced a return to profitability with net earnings of 569 million dollars.

PetroChina has made major investments in Canadian natural resources before, having taken a 1.7 billion dollar stake in 2009 in two projects to exploit oil sands with the Canadian company Athabasca Oil Sands.

The markets reacted with skepticism to the joint venture. In Toronto and New York, Encana shares were down 1.91 percent to $30.83 in after-hours trading. PetroChina dropped 3.69 percent to $135.66 in New York trading.

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