OREANDA-NEWS. Indian Oil Corporation Limited (IOCL) through its wholly owned affiliate IndOil Montney Ltd, Canada have signed transaction agreements with Progress Energy Canada Ltd. (Progress Energy Canada), PETRONAS Carigali Canada BV (PCC BV)wholly owned affiliates of Petroliam Nasional Berhad (PETRONAS) for the acquisition of a 10 percent interest in Progress Energy Canada's LNG-destined natural gas reserves in northeast British Columbia and in the proposed Pacific NorthWest LNG Ltd. (PNW LNG) export facility on Canada's West Coast. As part of the transaction, Indian Oil Corporation Ltd. shall also offtake 1.2 million tons of liquefied natural gas (LNG) per annum (MMTPA), which represents 10 percent of the LNG facility's production, for a minimum period of 20 years.

JAPEX Montney Ltd. with 10 percent and PetroleumBRUNEI with 3 percent are the other partners who acquired their interest in the project in 2013. PETRONAS will hold the remaining 77 percent of the integrated project.PETRONAShas stated that it will continue to work with potential customers and partners to secure markets for LNG.

The project holds 2P reserves at year end 2013 of 8.35 Tcfe and best case contingent resources of 24.7 Tcfe. The total reserves and resource potential is in excess of 50 Tcfe in which, IOCL share will be over 5 Tcfe. Progress Energy Canada is currently producing approximately 400 million cubic feet equivalent of natural gas per day in North East British Colombia which is currently supplying the Canadian market.

The development of PNW LNG's facility is progressing steadily with plans to reach a final investment decision by the end of 2014 and targeting first LNG exports in late 2018. The competitive front-end engineering and design (FEED) phase, involving three major engineering and construction consortia, is well advanced and PNW LNG is targeting the third quarter of 2014 for the receipt and evaluation of the engineering, procurement, construction and commissioning (EPCC) bids. The design is for two trains of approximately 6 MMTPA each with the option for a third train of the same size.

Pacific NorthWest LNG is working towards a world-scale LNG export facility on Canada's West Coast at Lelu Island near Prince Rupert, British Columbia. The proposed facility would liquefy and export natural gas produced by Progress Energy Canada and partners in northeastern British Columbia.

The acquisition of this interest in PNW LNG integrated project gives IOCL the opportunity to be part of a world class large-scale resource play and greenfield LNG development in a stable Canadian regime, providing IOCL access to significant upstream gas resources and securing LNG volumes for our domestic market.

Confirming the transaction, Mr. R. S. Butola, Chairman of IOCL said, “This transaction provides an excellent opportunity for IOCL to secure upstream participation in the highly prospective Montney play in Canada, along with securing long-term LNG supply for India's growing gas requirements. IOCL will have access to assured LNG supply of 1.2 MMTPA for a minimum period of 20 years from the PNW LNG Integrated Project. This LNG will partly meet the requirement of IOCL's upcoming 5 MMTPA Ennore re-gasification terminal in Tamil Nadu.”

Mr. R. S. Butola further said, “We are pleased to strengthen our partnership with PETRONAS through our participation in the PNW LNG Integrated Project. This transaction supplements IOCL's successful and long term relationship with PETRONAS including LPG JV in India (lndianOil PETRONAS Private Limited) and term-contracts for crude oil sourcing.”

Jefferies India Private Limted is acting as the exclusive financial adviser and Stikeman Elliott LLP is the legal adviser to IOCL.