Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on March 25, 2016.

 

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KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) has not given up its pursuit of a major liquefied natural gas (LNG) export project in Canada, as it continues to hold talks with Canadian authorities on how it can move forward with its much-delayed liquefied natural gas (LNG) project there, Reuters reported a company official as saying yesterday.

The state-owned oil company and its project partners have been waiting for nearly three years for a permit to build the Pacific NorthWest LNG facility in northern British Columbia, the news wire reported.

However, the project courted controversy after aboriginal and environmental groups have said the project would threaten a salmon habitat. Last week, it was reported that Canada’s federal environmental assessment agency granted an additional three months to finish an impact study of the project.

“We will continue to work constructively with the Canadian government and regulators to see how we can move forward,” Adnan Zainol Abidin, Petronas vice president of global LNG projects, was reported as saying yesterday. He was speaking to reporters on the sidelines of an industry conference.

Canada’s National Post newspaper reported earlier this month that Petronas was threatening to walk away from the project, but Pacific NorthWest LNG president had denied that Petronas would abandon the project if the federal government did not approve it by the end of March.

On whether Petronas will reconsider its position on the project, Adnan said: “We will make that call when the time is prudent.”

Reuters, citing analysts, said Petronas had already spent some US$12 billion (RM48.48 billion) on the project, roughly a third of its entire cost. Struggling with lower energy prices, the company earlier this year announced RM50 billion in spending cuts over the next four years.

The Canadian government has said it will announce a final decision on the project this year, the news wire added.

Separately, Adnan said Petronas will be identifying the next LNG field for its new floating LNG (FLNG-1) in three years.

He said the group identified some possibilities, which are now being looked into by its exploration and production people.

“FLNG-1 will be in Kenowit (Sarawak) for five years. I guess we can finalise the next [gas field] two years before the Kenowit contract ends,” said Adnan. He said all are located domestically.

“Technically, the facility can serve overseas as well, but we do not want to cross [that] bridge before the time comes. We will continue to focus on domestic fields at this juncture,” he said.

FLNG-1 is designed to have a capacity of 1.2 million tonnes per annum (mtpa), and its construction is expected to be completed and to sail away from Daewoo Shipbuilding & Marine Engineering Co Ltd’s shipyard by the second quarter of this year.

Adnan said Petronas expects FLNG-1 to commence operation by the third quarter of this year, and begin sending out its first cargo towards the end of the same quarter.

Adnan said demand for LNG has been growing annually, and that it is only “a matter of time” before oversupply turns around.

“The supply glut now is because there are a number of LNG plants going online at almost the same time,” he said. 

Nevertheless, he said it is anyone’s guess as to when LNG demand would outpace supply again.

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