Petronas may delay Canadian LNG project
KUALA LUMPUR: Petronas is considering delaying a Canadian liquefied-natural gas project over concerns about oversupply and cheap competing fuels, The Wall Street Journal reported.
Petronas has so far invested a third of the cost of the estimated USD27.5 billion Pacific NorthWest LNG Project in British Columbia.
The Canadian government is weighing approval of the project, which was scheduled to begin commercial operations in 2019.
The project aims to ship gas from Lelu Island – a small, uninhabited islet on the Pacific Coast – to energy-hungry Asian markets.
Reuters had earlier reported that Petronas and its partners have been waiting about three years for a permit to build the Pacific NorthWest LNG export terminal.
Others involved in the joint venture are Brunei National Petroleum Co, China Petroleum and Chemical Corp, Indian Oil Corp and Japan Petroleum Exploration Co.
People familiar with the matter told The Wall Street Journal that the oversupply of LNG and lower oil and gas prices have rendered the project unattractive at the moment. They declined to say how long the delay might be.
The report said weaker oil prices had taken a toll on Petronas, whose first-quarter profit after tax was down 60 per cent from a year earlier to RM4.6 billion from RM11.4 billion.
Other companies which have pushed back big LNG plans in the wake of the present oil and gas situation include Anglo-Dutch giant Royal Dutch Shell PLC.
Last week it said it was deferring a final investment decision on an expert facility in Lake Charles, Louisiana. It had, in June, similarly deferred an export project in Kitimat, British Columbia, said the WSJ report.
LNG prices, the report said, were dropping as demand had weakened. Over the next five years new supply from Australia, the US and Russia is set to hit the market.
Petronas had said in January that it would cut its spending by some USD11.4 billion over the next four years, It is also cutting 1,000 jobs.
Related story:
Canada resumes environmental review of Petronas-led LNG project
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