KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will pace its US$27 billion (RM120.35 billion) liquefied natural gas (LNG) project in Canada to match an expected increase in demand for LNG, including in non-traditional markets such as India, Pakistan and Bangladesh.
“We have to look at the market, look at how to reduce costs; we have to look at all areas to bring down costs,” said the national oil firm’s president and chief executive officer Datuk Wan Zulkiflee Wan Ariffin at a media luncheon briefing yesterday.
Wan Zulkiflee pointed out the demand for natural gas in some traditional markets such as Japan is on the decline, while others such as India, Pakistan and Bangladesh are picking up.
“Personally I’m bullish about them (India, Pakistan and Bangladesh) and LNG,” Wan Zulkiflee said.
He added that Petronas is setting up an office in India, but declined to give details, largely to tap into the LNG market in the central region of South Asia.
Natural gas prices have dropped to about US$2.77 per million British Thermal Unit (mmBTU) currently, and averaged a little more than US$2.50 per mmBTU in 2016. For the larger part of 2014 and 2015, natural gas traded at above US$4 per mmBTU.
Wan Zulkiflee said at present, Petronas is going through an environmental impact assessment with 190 conditions, and the state-owned oil company is going through it with a fine toothcomb.
He added that Petronas would need the consensus of its partners before making any decisions on the project dubbed as the Pacific Northwest LNG project.
Petronas controls a 62% stake in the project, while China’s Sinopec Corp has a 15% stake, both Indian Oil Corp Ltd and Japan Petroleum Exploration own a 10% stake each and Brunei National Petroleum Co a 3% stake.
Recent reports have it that Petronas is looking at shifting its proposed site for the LNG plant from Lelu Island in British Columbia to a new site on neighbouring Ridley Island.
Petronas has identified an available spot on Ridley Island, but details are scarce. Petronas’ earlier location on Lelu Island ran into issues as it is located near the ecologically sensitive islet Flora Bank — a breeding ground for salmon. Certain indigenous groups tout the area as sacred, and have attempted to block the large scale project.
The initial plans included Petronas constructing a 1.6km-long suspension bridge to link the LNG plant to marine berths at sea, which was deemed as costly. According to reports, the new proposal to shift the plant could save as much as US$1 billion.
In October last year, speculation was rife that Petronas was looking to exit its Canadian venture via a stake sale, but Petronas “categorically denied” the stake sale reports.