PetroChina, Encana shale gas deal collapses

PetroChina (PTR.NYSE, 601857.SH, 0857.HK) and Encana Corp (ECA.NYSE, ECA.TSE) have withdrawn from a US$5.5 billion partnership to develop a large tract of shale natural gas in western Canada, after failing to agree on the terms of the deal, the Wall Street Journal reported. The deal was slated to be one of China’s biggest investments in Canada’s resource sector, which has recently courted Chinese capital. Encana, the second-largest natural gas producer in North America after Exxon Mobil (XON.NYSE, XONA.FRA), had agreed earlier this year to sell PetroChina a 50% stake in a 1.3-million-acre shale gas plot in British Columbia and Alberta, known as Cutback Ridge, for US$5.56 billion. Encana said it now plans to sell joint-venture assets in the plot in pieces, as well as considering the sale of its midstream pipeline and processing assets in the region. Political concerns weren’t a factor in the failure of the partnership, said Encana spokesman Alan Boras; instead, both companies blamed technical issues. “The two parties failed to reach an agreement on the asset evaluation and the procedures of the agreement,” PetroChina spokesman Mao Zefeng said. “However, we don’t think this will impact PetroChina’s international strategy in North and South America.”