|Petronas has deferred its final investment (FID) decision on its proposed $36-billion Pacific NorthWest LNG project.
The state-owned Malaysian oil and gas company says the project’s construction costs are too high and oil prices are too low. FID was originally anticipated for mid-December 2014.
Shamsul Azhar Abbas, Petronas president and CEO of Pacific NorthWest LNG, said the company will continue to review the economic viability of the project and work on regulatory approvals. No new target date for a FID has been specified.
Abbas said it’s still possible the project will proceed. He said he “hopes that all outstanding factors can be resolved as soon as possible to enable the FID 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.”
The deferral is a potential blow to Premier Christy Clark’s economic vision for B.C., which hinges on the creation of an LNG industry in the province. However, Natural Gas Development Minister Rich Coleman remains optimistic, saying the Province has done everything it possibly can to secure an investment by Petronas in LNG, including clarity about environmental rules and taxation. He says the company’s focus is now on other areas, including supplier costs and federal issues.
BC NDP critic for natural gas development Bruce Ralson said Petronas’ decision is “a setback,” and noted other proponents have also delayed FID, including the BG Group.