- Malaysian energy company says proceeding depends on approvals
- Executive vice president dismisses energy market volatility
Petroliam Nasional Bhd. says it will proceed with its C$36 billion ($28 billion) Canadian natural gas export project in the face of a market slump that’s shaking profitability expectations for the global industry.
The Malaysian energy company known as Petronas renewed its pledge Thursday to move ahead with the liquefied natural gas shipping terminal it’s developing on the nation’s Pacific Coast, pending approval from Canadian regulators.
“Petronas would like to reaffirm its commitment to deliver long term LNG supply to its customers through the Pacific NorthWest LNG project in Canada, despite the current market volatility for oil and gas,” Wee Yiaw Hin, executive vice-president and chief executive officer for upstream at Petronas, said in an e-mailed statement. “Together with its partners, Petronas is ready to proceed with the project on condition that it receives the remaining regulatory approval from the Canadian Environmental Assessment Agency.”
Analysts have cast doubt on Canada’s ability to deliver LNG export projects this decade. The global market is entering a period of oversupply, with ventures starting up in Australia and the U.S., and demand is slowing in Asia just as the oil slump has taken down prices for LNG. There are 20 projects under consideration for export from the Pacific Coast in British Columbia and none have started construction.
‘Last to the Party’
Canada and East Africa are “last to the LNG party” globally behind the U.S. and Australia, according to CIBC World Markets commodities strategist Katherine Spector. Plunging oil prices mean only about 6 billion cubic feet (170 million cubic meters) a day of LNG exports will be developed in North America by 2022, Spector wrote in a report this week, about half the amount she had forecast last year would be online by 2020.
Petronas in June said it would proceed with the Pacific NorthWest LNG project, pending outstanding approvals, becoming the only Canadian proposal to issue an investment decision to date. Other owners of the venture are Indian Oil Corp., Japan Petroleum Exploration Co., China Petroleum & Chemical Corp. and Brunei National Petroleum Co.
“Pacific NorthWest LNG has fulfilled the required technical and commercial components of the project and is looking forward to meeting future LNG market demands,” Wee said in the statement on Thursday.