Petronas: Tax Breaks or 15-Year Hiatus for BC LNG Project

Petronas CEOShamsul Azhar Abbas with BC Premier Christy Clark during LOI signing, May 2014
“Fundamentally, we believe that the PNW LNG project has the ability to monetise, add value and link BC natural gas to the global market; to the benefit and prosperity of Canadians, especially to British Columbians. Nonetheless, the reality of the global LNG market is that we are facing potential overhang and decreasing demand that creates downward pressure on LNG prices. In this market environment, the ability to secure market and customers is paramount,” said Tan Sri Dato’ Shamsul Azhar Abbas, President and Group CEO, PETRONAS.
“Coupled with softening crude prices, there is a need for international energy companies such as PETRONAS to seriously prioritise and reassess our investments. The proposed fiscal package and regulatory pace in Canada threatens the global competitiveness of the PNW LNG project. This is further exacerbated by preliminary project costs, which indicates cost of local contractors to be higher and not benchmarked to global contractors cost,” he added.
Petronas claims that in its last portfolio review exercise, the current project economics appeared marginal. Without material cost reduction efforts cross the project the company says it will have a tough time reaching a positive FID by mid-December 2014.
The company believes that the next few weeks will be critical in ensuring that commitments made during the last meeting with the BC government officials will be followed through by creating a tangible environment which stimulates competitiveness and investor’s confidence in BC.