Petro-Canada CEO Ron Brenneman and Gazprom Chairman Alexey Miller signed an agreement Tuesday to investigate a joint venture in the liquefied natural gas (LNG) business that could involve operations in all areas of the LNG value chain, from exploration, production and liquefaction, to shipping, regasification and marketing in North America.

Specifically, the memorandum of understanding (MOU) covers options for Petro-Canada and Gazprom to jointly develop a US$1.2-1.5 billion liquefaction plant near St. Petersburg, Russia in the Baltic port of Ust Luga, and to investigate options for gas supplies to that LNG plant and then to regasification terminals in North America by 2009.

Petro-Canada said its strategy is to build a global, integrated LNG business that will add long-life producing assets to its portfolio, and enhance its long-term supply and marketing presence in North America. The company recently announced a joint agreement with TransCanada PipeLines to pursue the development of the Cacouna Energy terminal and regasification facility near Quebec City, PQ. The proposed $660 million project would be capable of providing 500 MMcf/d (5 Bcm/year) to markets in Canada and the United States via the TransQuebec and Maritimes pipeline system.

“This is both the right time and the right opportunity to advance Petro-Canada’s presence in the full LNG value chain,” said Brenneman. “This MOU is a critical first step in achieving a long-term business relationship with Gazprom in support of our growth strategy.”

Meanwhile, Gazprom, the world’s largest natural gas company, delivers gas to about 30 countries around the world but still has no stake in the global LNG business. The company reportedly also has been in negotiations with BP over potentially swapping pipeline gas in Europe for BP-produced LNG in Trinidad.

Russia holds about 30%, or 1,680 Tcf, of the world’s proved natural gas reserves. Petro-Canada hopes to join Gazprom in developing some of those reserves, in particular the Arctic Barents Sea Shtokman gas field, one of the world’s largest gas deposits. Gazprom is also talking to ExxonMobil, ChevronTexaco, Statoil and others regarding the development of the Shtokman field.

“Ultimately, we hope that Petro-Canada will be part of the consortium to develop the Shtokman field. But the MOU contemplates an early delivery of gas from St Petersburg and that would come off the existing gas grid in Russia,” Brenneman told a Moscow news briefing, according to Reuters News Service.

“We have expressed an interest. We think… the experience we have in offshore development in harsh environments with the presence of ice would make us a logical partner for the Shtokman development,” said Brenneman.

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