Petronas set to delay FLNG2 project

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) has confirmed it will be delaying the floating

liquefied natural gas 2 (FLNG2) project to 2020 from 2018.

Its vice president & venture director for LNG projects (domestic) Datuk Abdullah Karim said in press

conference yesterday that the decision was taken as a part of the wider group’s plans to rationalise

certain projects.

“As you would have read in the news, that we had to rationalise to control … this is one area we believe

we can carry this out to control cashflows,” Abdullah said.

Abdullah and the vice president for global LNG projects Adnan Zainol also announced that Petronas

would be sailing the FLNG1 in May 2016.

“This will bring the facility to the location offshore Sarawak, it is about 200km offshore of Sarawak. And

from there we will commence hook-up operations to start up the facility.

“We will then make the first drop of LNG in the third quarter of 2016. We hope to send out the first

cargo out of the facility towards the end of the year,” Adnan said.

The capacity for the FLNG1 capacity that will be parked in Kanowit, Sarawak is 1.2 billion tones a year,

according to Abdullah.

“With the FLNG1, we now have a way to monetise the smaller remote fields with this facility. We could

not do that prior to this. With this, it opens up a new (technological) play for us,” Adnan said.

When asked about the status of the Canadian LNG project, Adnan said the group would make an

announcement in the near future. “We would not dwell on that for now.”

Meanwhile, Adnan said that it was now a buyers market in LNG due to the ongoing supply glut in the

industry. However, he added that demand may outstrip supply if projects worldwide continued to be

deferred.

“For the moment there is an oversupply of LNG. That is why there are a number of projects that were

deferred or not sanctioned. If you look at it, the demand is expected to grow annually and it will only be

a matter of time when LNG will be in demand again,” Adnan said.

“Demand is growing but it is only in this period where we have a number of LNG plants coming online at

almost the same time, including ours and Australia-based Blackstone’s.

The new plants would help widen the glut situation,” he added.

He also declined to comment on what would be a breakeven level for LNG prices for its FLNG1 given that

there are many other considerations including shipping and refrigeration costs involved.

“There are sold on a long-term basis,” he said.

NGS INDIA