KUALA LUMPUR: With Malaysia's Petronas making a bid to purchase Canada's Progress in an effort to boost natural gas to the Southeast Asian country, observers are questioning if the move will be as successful as initially thought when the deal was announced late last week. In recent years, companies have been spending billions on remote natural gas plays in Alberta and British Columbia, with plans to sell the gas in Asia where prices are substantially stronger. With a supply glut of gas keeping prices depressed in North America, foreign companies armed with big cash reserves are being welcomed by Canadian energy firms. “Our asset base requires extensive capital to develop its large potential and ultimately access international LNG markets," Progress chief executive officer Michael Culbert said in a statement. “Petronas offers the size and scale that will enable our company to continue to grow and not be limited by the same cash flow challenges faced by many producers in the North American natural gas market today.” Back here in Kuala Lumpur, Mark Timmons, a former oil exec in Europe, told Bikyamasr.com that the positives do out weigh any worries over the price and cost of the deal. “Right now, Malaysia is the victor in this new agreement. If successful, it could really do wonders for the country's energy needs and boost the relationship with Canadian companies for the long haul,” he said. Last week, the Malaysia government-owned Petroliam Nasional announced it had agreed to purchase Canada's natural gas producer Progress Energy Resources for some $5.5 billion Canadian dollars. It is the latest move by Petronas in Malaysia to bolster its North American holdings. Petronas also said it plans to build a liquefied-natural-gas export terminal in Prince Rupert, British Columbia, off Canada's western coast—the fourth major LNG export project under consideration for the country. North American natural-gas prices have fallen sharply amid a boom in new natural-gas drilling techniques on the continent. That has spurred a number of projects, all in the early stages, in the United States and Canada aimed at exporting gas to Asia, where demand is strong and prices relatively high. The Petronas deal sent shares of other Canadian gas producers higher Thursday. Low gas prices have weighed heavily on the sector, and investors appeared encouraged by the prospect that more Asian buyers will emerge. For observers and experts like Timmons, it is a positive step towards creating a better energy-efficient future for Malaysia. “Let's just think of it this way: Malaysia is looking to become a leader in the development of their infrastructure and they need energy and resources. This deal will deliver those,” he added.
