By Khairul Khalid
Wan Zulkiflee Wan Ariffin
Petronas cannot afford any more delay in the US$30 billion (RM130 billion) liquefied natural gas (LNG) project in Canada, says president and group chief executive officer (CEO) Wan Zulkiflee Wan Ariffin.
“We are still committed it but no project can be kept in abeyance forever. If there is any further delay, we will review the next course of action,” said Wan Zulkiflee.
The Petronas CEO explained that the final hurdle is approval from the Canadian government.
“There are no more negotiations. We are just awaiting environmental approval from the Canadian government. Hopefully, that can be secured in the next two to three months and we can start work early next year for it to be completed by 2021,” said Wan Zulkiflee.
The Petronas CEO said that he is taking a long-term view of its investment in Canada despite low oil and LNG prices.
“We are still confident about the project. We can’t have knee-jerk reactions. We think it is good for Canada. LNG is still the most green fossil fuel around. We are working hard to secure approval,” said Wan Zulkiflee.
Wan Zulkiflee was speaking at a press conference announcing Petronas’ financial results for the third quarter of 2015 (3Q15).
Petronas posted a steep fall in third-quarter earnings for 3Q15 with profit after tax (PAT) down 91% year-on-year to RM1.4 billion.
Petronas’ revenue for 3Q15 fell 25% year-on-year to RM60 billion. For the first nine months of 2015 Petronas’s revenue has fallen 25% to RM187 billion and PAT down 57% to RM24 billion.
Petronas attributed the poor results mainly to its upstream business that was hit badly with RM5.4 billion written down in impairment charges, as well lower crude and LNG.
The Canadian project – Petronas’ biggest-ever overseas investment – has been plagued by delays controversy and delays. The project is estimated to eventually cost Petronas US$30 billion over its entire duration of 25 years.
The project was delayed several times due to protracted negotiations with the British Columbia government for better financial incentives.
Petronas also encountered resistance from a band of natives in British Columbia claiming that the project would pose grave dangers to marine habitat in the area.
Petronas’ initial investment in British Columbia started with its purchase of Canadian company Progress Energy Resources for US$5 billion in 2012.
The LNG terminal will include a pipeline to deliver gas supplies from fields in northeast British Columbia to Lelu Island, near Prince Rupert, British Columbia, 770km northwest of Vancouver and would produce as much as 19.68 million metric tonnes of LNG a year, for 25 years starting in 2018.
The terminal would enable Petronas to sell and transport Progress Energy’s shale gas assets from British Columbia to lucrative Asian markets. Without the all-important export terminal, Petronas’ Progress Energy purchase diminishes in value.
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