LONDON, March 18 China's biggest refiner Sinopec is in talks with Malaysia's Petronas to buy a 15 percent stake in a $20 billion Canadian liquefied natural gas (LNG) project, three sources with knowledge of the matter said.
The Malaysian state oil company's Pacific Northwest LNG project, due to start-up in late 2018, is one of about a dozen proposed LNG export terminals for British Columbia's Pacific coast.
Petronas has moved quickly to leapfrog rivals in the race to export cheap Canadian gas to hungry Asian markets after securing export permits and filing environmental documents.
This month it struck a deal to sell Indian Oil Corp. a 10 percent stake, alongside existing partners Japan Petroleum Exploration and state-run PetroleumBRUNEI, in a move designed to share the financial burden of developing the project.
Its deal with IOC also included a 10 percent stake in the shale gas assets that will feed the LNG plant, but sources could not confirm if Sinopec intended to follow suit.
While IOC secured around 1.2 million tonnes per annum (mtpa) of the project's 12 mtpa export capacity, Sinopec can expect to receive around 1.8 mtpa with a 15 percent stake, one of the sources said.
Chinese companies, like their Asian peers, have been scouting for oil and gas assets abroad to meet rising domestic demand.
China National Petroleum Corp. last year bought a 20 percent stake in the Novatek-led Yamal LNG project in Russia's Arctic, while PetroChina hopes to develop another Canadian LNG project called Kitimat.
It is also considering a $40 billion investment in western Australia's Browse LNG project.
A separate industry source added that Sinopec is holding discussions with multiple project developers and is undertaking a comprehensive comparison to decide the best way forward.
Sinopec is also in talks to invest in the Kitimat project.
A Chinese delegation is expected in Canada this week to discuss energy cooperation between the two countries, according to a diplomatic source in Beijing.
(Additional reporting by Ron Bousso in London and Chen Aizhu in Beijing, editing by William Hardy)