Japan Petroleum Exploration (Japex) has sold to Petronas its interest in a Canadian shale gas asset, and said it will record an extraordinary loss of C$493 million (US$404 million) as a result of the divestment.
Japex said it had resolved to sell its 10% in the North Montney (NM) joint venture, but did not disclose the sale terms.
The asset would have provided the feedstock gas for the cancelled Pacific North West LNG project.
Japex said it had invested in the NM shale gas development and production and pre-development work for the LNG project.
"Even after the decision not to proceed with the LNG project in July 2017 due to changes in the business environment, Japex has been working with PECL (Petronas) and its partners to maximize the value of the NM project by optimizing the development plan," said the Japanese company.
However, Japex decided to sell its interest because "the environment surrounding the E&P business is expected to become even more severe due to the prolonging effects of the Covid-19 since early last year, including the structural changes by the new normal after the Covid-19 and accelerating the global decarbonization."
As a result of the transaction, Japex said it expects to record an extraordinary loss of C$493 million in the consolidated financial results for the second quarter of the year ending 31 March 2022.
The co-owners of the NM asset are Petronas (62%), Sinopec (15%), Japex (10%), India Oil (10%) and Petroleum Brunei (3%).