KUALA LUMPUR: Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin has warned that the LNG industry may stagnate if prices do not encourage necessary investments to sustain the business, even as demand for the commodity has grown.

Petronas is currently the world's third-largest producer of LNG, which stands for liquefied natural gas, i.e. gas that has been supercooled into liquid form so it can be shipped. 

“Today, players are cancelling and delaying projects in tandem with the LNG prices. Without sufficient investments, both buyers and sellers face an uncertain future in terms of business sustainability and energy security,” he said.

He was speaking to the audience of the LNG Producer-Consumer Conference 2017 in Tokyo, Japan, and an excerpt of his speech was sent out by Petronas in a media statement today.

LNG prices have plunged by over two thirds since May 2014. The decline has been described as the steepest and most prolonged drop in prices the industry has ever faced. News reports have highlighted that the flood of LNG supply in the market will likely continue to weigh on spot LNG prices until the early next decade.

Wan Zulkiflee said Petronas too was forced to not proceed with its proposed LNG project in Canada due to the prolonged depressed prices and unfavourable market conditions, though he acknowledged that such market dynamics have stimulated internal efficiency improvements that provided Petronas with better agility as an integrated end-to-end LNG player. 

Hence, he is calling on producers and consumers of LNG to collaborate towards encouraging growth and sustainability of the industry, to work towards mutually-favourable market conditions to encourage investments for business longevity and long-term supply stability.

“While current market dynamics are not encouraging conversations about sustainable gas pricing, it is in our interest, both as sellers and as buyers to bring this up.

“Although buyers’ considerations remain in our best interests, the current market volatility necessitates the security of demand. This is imperative for the producers to continue investing to support the upstream and LNG value chain in a timely manner,” he said.

With over 30 years of experience in integrated global LNG business, Petronas, which recently celebrated its 10,000th cargo from its Bintulu LNG Complex in Malaysia without missing a single cargo -- the load was delivered to Japan on Oct 4 -- said it is committed to meet the growing demand for clean energy required for global sustainability and climate change goals.