Chevron to buy stake in Kitimat LNG from Encana, EOG

Updated 26 December 2012

Chevron to buy stake in Kitimat LNG from Encana, EOG

CALGARY, Alberta: Chevron Corp. said on Monday it will enter the Canadian liquefied natural gas business with the acquisition of the 50 percent stake in the Kitimat LNG project held by Encana Corp. and EOG Resources Inc.
Chevron will take Encana's and EOG's 30 percent stakes in the LNG-export project for an undisclosed price as the No.2 US oil company looks to jumpstart North American natural gas exports.
It will also buy the two companies' interest in a pipeline serving the project, at Kitimat, 650 kilometers (400 miles) north of Vancouver, and will pay $ 550 million for a half stake in 644,000 acres of exploration lands in the Horn River and Liard shale-gas fields owned by Apache Corp.
Apache will then pay Chevron $ 150 million to raise its stake in the British Columbia project and associated lands to 50 percent, netting the US independent oil and gas producer $ 400 million from the transaction.
Analysts say the addition of a deep-pocketed partner increases the likelihood that the multi-billion dollar Kitimat LNG — the most advanced of a handful of gas-export facilities slated for British Columbia's northern coast — will be completed.
"With Chevron involved it will happen sooner than it otherwise would have," said Michael Dunn, an analyst with FirstEnergy Capital.
Though no price was given, Robert Morris, an analyst with Citi Research, estimates that Encana and EOG each received about $450 million for their stakes and the exploration lands.
Kitimat LNG was last year awarded Canada's first LNG export license by the National Energy Board, allowing it to export 10 million tons of LNG per year. The project is slated to begin shipping gas to Asian markets by 2017.
Other Canadian LNG facilities are planned by Royal Dutch Shell Plc, Malaysia's Petronas [PETR.UL], BG Group Plc and others, making British Columbia a rival to the US Gulf coast, where nine projects have been announced and one, Cheniere Energy Inc's, Sabine Pass project, is already under construction.
Chevron has existing LNG projects in Australia, Africa and South America. Adding the Canadian operation will let it tap high-priced export markets and escape a domestic gas market that remains depressed because of burgeoning production from shale gas fields.
"This investment grows our global LNG portfolio and builds upon our LNG construction, operations and marketing capabilities," George Kirkland, Chevron's vice chairman, said in a statement. "It is ideally situated to meet rapidly growing demand for reliable, secure, and cleaner-burning fuels in Asia, which are projected to approximately double from current levels by 2025."
Encana said the sale of its stake was consistent with its plan to focus on its core natural gas business and that the deal will reduce its future capital commitments while EOG will now focus on U.S. crude oil production.
The acquisition is expected to close it the first quarter of 2013.

Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.