Malaysia’s Petronas has announced it will defer a final investment decision (FID) on its $36 billion LNG project in British Columbia.
The Malaysian company and its partners in Pacific NorthWest LNG continue to review the economic viability of the project which, in a time of declining oil prices, presents challenges.
Consequently, Petronas and its partners have decided to defer the project’s $36 billion FID “pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of the project and competition from other LNG producing countries.”
Costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive FID can be undertaken, the company stated. At the same time, Pacific NorthWest LNG will continue work to secure necessary regulatory and other approvals from the Government of Canada.
“Petronas hopes that all outstanding factors can be resolved as soon as possible to enable the final investment decision to be made within the identified LNG supply and demand window. This is vital in light of the current intense market environment and for Pacific NorthWest LNG not to lose out on long-term contracts to competitive United States LNG projects,” said Shamsul Azhar Abbas, Petronas president and CEO.
Petronas, through its upstream unconventional company, Progress Energy Canada Ltd., and its partners, will continue to invest in its natural gas development in British Columbia “at a measured pace” until such time as a positive FID is made.
“Pacific NorthWest LNG represents a tremendous opportunity to lead our province into a new energy future,” said B.C. Deputy Premier and Minister of Natural Gas Development Rich Coleman. “We have put the foundation in place, including a competitive fiscal framework and skills training plan, to ensure Pacific NorthWest LNG has the assurance it needs to move forward with a final investment decision in our province.”
B.C. earlier this year released details on its LNG tax. Petronas had been eyeing an FID by the end of 2014.