Petronas Defers Decision on Canadian LNG Project

Malaysia's Petronas on Wednesday announced the company and its partners have decided to defer final investment decision (FID) regarding Pacific NorthWest LNG project in British Columbia.

“Petronas and its partners in the Pacific NorthWest LNG project 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 final investment decision (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,” a statement by Petronas said.

The company believes that costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive FID can be undertaken. Pacific NorthWest LNG will continue work to secure necessary regulatory and other approvals from the Government of Canada, Petronas said.

Late last month, British Columbia granted environmental permit to Petronas backed export facility in Prince Rupert and the Prince Rupert Gas Transmission pipeline.

“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,” Tan Sri Shamsul Azhar Abbas, President and Group Chief Executive Officer of Petronas said.

Petronas, Sinopec, JAPEX, Indian Oil Corporation and PetroleumBRUNEI are all shareholders in Pacific NorthWest LNG and the associated natural gas supply.