B.C. says Petronas close to LNG call
Malaysia’s Petronas will be ready to decide whether to proceed with a proposed $27-billion liquefied natural gas plant on the West Coast by April, says Rich Coleman, B.C.’s minister of natural gas development.
The state-owned Malaysian energy company, which won conditional federal approval in September after more than three years of regulatory review, is in the process of reassessing the project’s costs, including those of steel, pipes and other inputs, he said.
“They need to go out and re-price the project,” Coleman said.
“They hope to have that done in three to six months. Once they’ve done that, they’ll go back to the partners and decide whether to make a final investment decision.”
Petronas is reviewing the project and working to lower capital costs, it said in an emailed response to questions.
“Before the project can proceed to a positive final investment decision, we need to ensure the project is competitive with similar projects around the world,” the Malaysian explorer said. Petronas is the majority owner of the Pacific Northwest LNG project, which could produce as much as 19.2 million tonnes a year of the fuel, or about eight per cent of last year’s global trade.
Its partners are China Petrochemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. and Brunei National Petroleum Co.
A Japex spokesman, who declined to be named citing internal policy, said there is no change to the company’s plans regarding the Pacific Northwest LNG project.
An Indian Oil spokesman was unable to comment immediately, while a Beijing-based spokesman for Sinopec said the company has no comment on the matter.
Coleman, who met with Petronas executives last month in Kuala Lumpur, said those partners remain on board as buyers. “There was no indication that any of the partners aren’t still in,” he said. “They have a really strong focus on getting it to be financially viable.”
The Sept. 27 approval from Prime Minister Justin Trudeau’s government came with about 190 conditions, including a cap on carbongas emissions. None of those were “overly surprising” to Petronas and are unlikely to be a major obstacle, Coleman said.
If Petronas moves ahead with the project, it would be the first new onshore greenfield project of that scale since December 2013, according to Wood Mackenzie Ltd.
Market forces haven’t been working in the project’s favour.
Since Petronas first submitted the project for environmental approval in 2013, spot prices for the fuel have fallen by nearly 60 per cent as a host of new projects have boosted supply faster than demand has grown.
Global supply capacity is expected to grow by almost half through 2020, at which point it will exceed demand by 29 per cent, according to Bloomberg New Energy Finance.
Those forces have stymied more than 20 export proposals in British Columbia. Of those, just one small one has moved ahead — a $1.6-billion project backed by Indonesian billionaire Sukanto Tanoto’s RGE Group that will have a total capacity of about 2.1 million metric tonnes per year.