PetroChina will pay Encana $2.2b for shale gas JV

PetroChina will pay Encana Co, Canada's largest natural gas producer, C$2.2 billion ($2.2 billion) for a 49.9 percent stake in a rich Alberta shale gas prospect owned by the Canadian company, Reuters reported.

Encana said the venture, for which PetroChina has a non-controlling interest, allows the partners to bypass stringent reviews under Canadian government's new restrictions, according to Reuters.

Encana announced the deal less than a week after Canada issued its new framework for approving takeovers of resource assets, particularly oil sands, by foreign State-owned companies.

The Canadian government's new framework effectively bans enterprises controlled by foreign governments from taking control of more businesses in Canada's oil sands, but the government said it welcomed investment and joint ventures, according to Reuters.

The Canadian government had no comments yet but Reuters said there were no indication of delays like the one faced by CNOOC Ltd in its eventually successful bid for oil producer Nexen Inc.

Under the deal, which follows a failed joint-venture attempt by the pair in 2011, a unit of PetroChina known as Phoenix Duvernay Gas will take the nearly-half interest in Encana's Duvernay play in west-central Alberta, estimated to contain 9 billion barrels of oil equivalent.

Phoenix Duvernay Gas has already paid C$1.18 billion and the other C$1 billion is payable over the next four years. Reuters said the money will help Encana pay for development. During the period, the partners will spend C$4 billion on drilling and processing facilities.

Encana and PetroChina in 2011 tried to set up a C$5.4 billion joint venture on British Columbia gas assets, but the deal fell through over reported disagreements about asset value and development pace.