Apache is to sell off some of its large stake in the Kitimat liquefied natural gas project in British Columbia, Canada.
The Houston-based player said the 50% stake
it holds in the project, which it operates along with partner Chevron, is too
large for it to currently be able to afford.
Apache said on Wednesday that it will spend
a total of $8.5 billion on exploration and production this year, the majority
in North America as it seeks to advance liquids output.
With $600 million earmarked for Canada,
Apache said this amount is exclusive of any LNG plans – be they in Canada or
Australia, where it is involved in the giant Wheatstone project.
Based on its current 50% share in Kitimat,
Apache would need to spend another $1 billion this year on the project. Apache
estimated in 2012 that the total costs for Kitimat would be $15 billion.
However, the company said it will “right-size”
its stake in Kitimat this year, although it did not mention what size stake it
will sell. It would appear, however, that the company will not make an exit
Dow Jones reported in November that Chinese
giant Sinopec was in early talks with Apache to buy a minority stake in Kitimat.
The news wire cited “people
familiar with the matter” as saying the Kitimat project was one of several LNG
projects the state-owned refinery giant was eyeing in the region.
Apache inked a deal with US supermajor
Chevron in late 2012 to build and operate the Kitimat LNG project and develop
shale gas resources at the Laird and Horn River basins in British Columbia.
The deal as it stands is set to see the
pair become equal joint owners of the LNG plant, the Pacific Trail Pipeline and
644,000 undeveloped acres in the Horn River and Laird basins.
Apache is to be the upstream operator with its
partner operating the downstream side.
A final investment decision on the project is still
Chevron in October warned there was "no
guarantee" on Kitimat as the project is still competing with other
contenders in its global portfolio.
But the supermajor has said it would aim for Kitimat to be the first major
project exporting plentiful North American natural gas to hungry Asian markets,
a race being chased by a number of would-be LNG exporters.