KUALA LUMPUR (July 1): Construction of Petroliam Nasional Bhd's (Petronas) 25%-owned associate LNG Canada’s estimated C$40 billion (about RM134.04 billion) liquified natural gas (LNG) facilities in Canada’s British Columbia province is moving ahead despite uncertainties over global LNG projects and as LNG Canada contends with the impact of the Covid-19 pandemic that has led to project delays and cost overruns.
Engineering News-Record (ENR), quoting LNG Canada chief executive officer (CEO) Peter Zebedee, reported yesterday that the biggest private-sector investment in Canadian history is in its third year of construction, and that LNG Canada is facing Covid-19-driven project delays and cost overruns, with the finish date pushed back to the second half of 2025 (2H25).
"In sharing its recent quarter results, firm executives expected continuing impact on cost and the schedule from the virus, scope changes and permit delays, but said the project will operate in 2023. Other LNG Canada costs include investments in upstream natural gas infrastructure,” ENR reported.
It was reported that project joint-venture (JV) contractors Fluor Corp and JGC Corp besides subcontractor Soletanche Bachy Canada had finished Phase 1 of work on LNG Canada's export terminal in British Columbia's Kitimat district.
The export terminal is reportedly the project's major component.
Also part of the project is the 670km Coastal GasLink pipeline being built by TC Energy to transport gas from northern British Columbia fields to the terminal, ENR reported.
According to the news report, delivered in June 2021 to the project’s new offloading port in the Kitimat Harbour was a 345-tonne, 50-metre-tall cryogenic heat exchanger and two slightly smaller units to convert gas to liquid for export.
It was reported that Zebedee termed the delivery a “significant milestone”.
Quoting LNG Canada officials, ENR reported that the project is on track to “ship its first cargo” by mid-decade.
It was reported that with construction set to begin its peak next year, work could require up to 7,500 workers in rotating shifts.
LNG Canada is contending with LNG market headwinds. It was reported that as work on the project progresses, the LNG market faces shifting investor enthusiasm and market demand, besides low-cost competition from Russia and Qatar.
"Australia’s Woodside Petroleum Ltd and Chevron Canada Ltd recently pulled back LNG Canada financial support. A 2020 Global Energy Monitor report listed 13 cancelled Canadian LNG projects,” ENR reported.
Petronas in 2018 acquired a 25% stake in LNG Canada. In a statement on May 31 that year, Petronas said its wholly-owned entity North Montney LNG Ltd Partnership had entered into a purchase and sales agreement for an equity position in the LNG Canada project.
Besides Petronas' 25% stake in the project, Royal Dutch Shell plc subsidiary Shell Canada Energy has a 40% stake in the project, while PetroChina Canada Ltd holds a 15% equity portion, according to Petronas.
Meanwhile, Diamond LNG Canada Ltd, a subsidiary of Mitsubishi Corp, owns a 15% stake in the project, while Kogas Canada LNG Ltd holds the remaining 5% stake, Petronas added.
Petronas' ex-president and group chief executive officer (CEO) Tan Sri Wan Zulkiflee Wan Ariffin said in the statement then that Petronas is in Canada for the long term, and that the company is exploring a number of business opportunities that will allow the group to increase its oil and gas production and accelerate the monetisation of its world-class resources.
"LNG is just one of those opportunities,” Wan Zulkiflee said then.