Malaysian state oil company Petronas will buy a 40 percent stake in Australian energy firm Santos Ltd's Gladstone liquefied natural gas project for up to $2.51 billion, to bolster its position as Asia's largest LNG producer as competition heats up.
State-owned Petronas' investment in the project, which plans to use coal seam gas as feedstock, follows a $12 billion take-over bid last month by Britain's BG Group Plc for Australia's Origin Energy Ltd, and is seen as a vote of confidence for Asia's young coal seam gas industry.
The deal marries Santos' reserves with the marketing power of Petronas, the third-largest LNG producer in the world. The acquisition is Petronas' first investment in coal seam gas, its first foray in Australia and, according to Dealogic, its biggest overseas acquisition.
Petronas will make an initial cash investment of $2.01 billion, and a further $500 million on reaching a final investment decision for a second LNG train at the Gladstone project, located in Australia's Queensland state, Santos said. Under the agreement, Santos and Petronas will form a joint venture company to develop and operate a 450-km gas pipeline and an LNG plant at Gladstone.