PetroChina ends Encana shale-gas talks
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Shanghai Daily, June 23, 2011
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PetroChina and Canadian company Encana failed to reach an agreement to co-develop shale natural gas in Canada. |
PetroChina Co has ended talks with Encana Corp on a proposed C$5.4 billion (US$5.5 billion) deal to develop shale natural gas in Canada, but said the call-off won't change its overseas strategy.
The two parties failed to agree on terms of the transaction, including the joint operating agreement, Encana said in a statement on Tuesday.
PetroChina had agreed to pay C$5.4 billion for a 50 percent stake in Encana's Cutbank Ridge field in western Canada, calling it "a platform for entering the major market in North America" in February when the deal was first announced.
The purchase would have increased PetroChina's global gas production by 500 million cubic feet daily at peak capacity, or about 2 percent of its 2011 oil/gas output level, Mirae Asset Securities analyst Gordon Kwan said in February.
Analysts said political factors don't seem to be behind the break-up because the deal was not about buying a company but a stake in a project. Also, Encana would have remained the operator and the output would remain in the North America supply system, analysts added.
A PetroChina spokesman said the two sides failed to agree on asset evaluation, but insisted the end of talks won't change its international strategy.
"After close to a year of exclusive negotiations with PetroChina, we were unable to reach alignment on the planned transaction," Encana CEO Randy Eresman said.
Also, overseas acquisitions in shale gas projects by Chinese companies have been seen as a strategy for China to migrate shale gas exploration technology back home to monetize its vast domestic unconventional resources.
Cutbank Ridge currently produces 255 million cubic feet of gas a day from proven reserves of about 1 trillion cubic feet.
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