PETROCHINA Co has agreed to pay Canadian natural gas producer Encana Corp C$2.18 billion (US$2.2 billion) for a near-half stake in a shale gas project in Alberta.
The deal, announced by Encana, comes less than a week after Canada unveiled new tightened foreign investment rules for its energy sector.
Under the new joint venture agreement, PetroChina will pay C$1.18 billion for a 49.9 percent stake in Encana's Duvernay shale assets and another C$1 billion over the next four years to help fund development.
Canadian Prime Minister Stephen Harper said on December 7 that Canada would not allow foreign state-owned companies to control the country's oil sands projects after giving approval for the takeovers of Nexen Inc by China's CNOOC and of Progress Energy Resources Corp by Malaysia's Petronas.
Analysts said the latest deal could face less scrutiny because Encana will remain the operator of the Duvernay joint venture, which includes no oil sands.
"While the door may have closed on corporate deals for the time being, there are still plenty of asset deals left to do," Sanford C. Bernstein analysts wrote in a note.
The Duvernay joint venture lands contain about 9 billion barrels of oil equivalent, Encana estimated.
The deal appears expensive for PetroChina, according to Bernstein analysts. "Nevertheless, the acquisition gets PetroChina into one of the most promising shale liquids resources in North America," they wrote.
PetroChina's investment will enable Encana to "accelerate the pace at which the full production potential of our Duvernay lands can be achieved," Randy Eresman, Encana's president and CEO, said in a statement.
The deal followed a similar but failed joint venture attempt between the two companies on a separate project in Canada in June last year, as they failed to agree on asset evaluation.