Bloomberg News

Shell, PetroChina May Ship Canadian LNG to Gain From Asia Prices

October 27, 2011

Oct. 27 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, together with PetroChina Co. and Japanese and South Korean partners are examining plans to ship liquefied natural gas from Canada’s west coast to Asia.

“This gives us a chance to arbitrage the price differential between $4 gas in North America and with what in the last quarter was around $15 gas prices in Asia,” said Shell Chief Financial Officer Simon Henry. ‘It’s highly likely’’ that PetroChina will be a partner in the project following collaborations with Shell in Australia and China.

Shell plans to develop an export facility in British Columbia in Canada to supply LNG to clients in Asia. Encana Corp., Apache Corp. and EOG Resources Inc. this month won approval from Canadian regulators to export LNG from a planned plant to be located in Kitimat, British Columbia.

This month, Shell bought a marine terminal near Kitimat from Cenovus Energy Inc., Canadian Press reported, citing Cenovus spokeswoman Rhona DelFrari.

“Energy security, particularly in the U.S., will probably limit” LNG export volumes, Henry told reporters today on a conference call. “You can see potentially attractive returns there.”

Shell, based in The Hague, is also examining plans to produce transport fuels and chemicals in Canada and U.S., Henry said. The company together with partners is working on the Green Corridor project to convert gas into 300,000 tons of LNG a year to fuel long-distance transportation, he said.

--Editors: Alex Devine, Will Kennedy

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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