IOC in talks to buy Petronas' 10% stake in Canadian gas asset

NEW DELHI: Indian Oil Corp ( IOC), the nation's biggest refiner, is in talks to buy Malaysian state oil company Petronas' 10 per cent stake in a Canadian shale gas asset.

"Talks have been held but they are far from being concluded. Infact, there have been disagreements between the IOC and Petronas over the price and had almost broken down," sources with direct knowledge of the development said.

Petronas, another source said, is seeking between USD 1.1 billion to USD 1.5 billion for its 10 per cent stake in Canada's Progress Energy Resources Corp.

Shamsul Azhar Abbas, CEO of Petronas, today said in Kuala Lumpur said the company was close to selling a stake in its Canadian shale gas assets to an Indian company.

Sources, however, said there was no certainty that the deal will be concluded as differences over valuation persist.

The Malaysian firm, through its wholly-owned subsidiary Petronas International Corp, had in 2011 bought Canada's Progress Energy Resources Corp in a Canadian dollar 5.2 billion deal to get the Altares, Lily and Kahta shale gas assets in northeastern British Columbia.

In March this year, it sold a 10 per cent stake in its planned liquefied natural gas facility and shale gas project to Japan Petroleum Exploration Co (Japex).

The Malaysian firm is planning to build a liquefied natural gas terminal off Canada's Pacific Coast, aimed at exporting natural gas to Asian markets.

Progress Energy has more than 1.9 trillion cubic feet of proved and probable gas reserves in British Columbia. IOC's plan to take 10 per cent will also include an offtake agreement for the Indian energy company.

IOC is looking to expand its protfolio of exploration and producing assets while Petronas wants to share some of its costs.

Sources said the details of deal between IOC and Petronas have not yet been finalised as negotiations are far from being concluded.

IOC, which had previously ventured into overseas oil and gas exploration and production with state-owned explorer Oil India Ltd, is currently talking to Petronas alone. There has been no decision so far on talking OIL on board for the acquisition.

Shares of IOC closed at Rs 198.85, down 2.12 per cent on the BSE.