Petronas to decide on Canada project by June

Petronas to decide on Canada project by June

Malaysian energy firm Petronas expects to make a final investment decision (FID) on an US$11 billion (RM39.7 billion) liquefied natural gas (LNG) export terminal in British Columbia by June, after postponing the decision late last year, its outgoing chief executive said.

Tan Sri Shamsul Azhar Abbas said the state-owned company had agreed to farm-out about 38% of the Pacific NorthWest LNG project project, and was in talks with a Chinese buyer for another 10-2%. He did not give any further details.

“In the last couple of weeks, we have been in discussions with another Chinese party who is interested in coming in also,” Shamsul said at a press event late on Friday.

“We said many months ago it would be ideal if we were to work out a 50% farm-out of the Canadian project. So far we have achieved 38%,” he said, adding that the latest talks centred on a stake of 10-12%.

Shamsul said Petronas could wait until end of June to make an FID on the project.

Petronas delayed giving a final go-ahead on the project plans in December, citing high costs and other outstanding issues.

It had warned that the economics of the project, part of a roughly US$35 billion investment in Canadian gas, were marginal and said it could delay an investment by up to 15 years if outstanding issues around taxation, regulation and costs were not resolved.

Shamsul said on Friday that issues with the British Columbia government had been “resolved amicably”. A decision by Canadian Prime Minister Stephen Harper to provide tax breaks for LNG projects was also a good sign, he added.

Petronas reported a US$2 billion fourth-quarter loss last week and announced plans to cut in spending over the next two years, hit by a slump in global oil prices.

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