From Bloomberg
Malaysia’s Petroliam Nasional Bhd abandoned its long-stalled plans to build a $27 billion liquefied natural gas export terminal on British Columbia’s coast, becoming the latest casualty of a global glut of the fuel.
Petronas, as the state-owned company is known, won Canada’s approval for the project in September, following more than three years of regulatory reviews and opposition from environmentalists, scientists and indigenous communities. The project also faced economic headwinds, with 18 gas export proposals in the province in limbo.
Gas supplies from Australia to U.S. shale fields have inundated the world’s markets, prompting a price rout that’s scuttled projects including Woodside Petroleum Ltd.’s $40 billion Browse floating terminal proposed off Western Australia. The cancellation of the Petronas project threatens to further dent confidence in Canada’s energy industry, which is still reeling from a string of asset sales by international producers, and eliminates a potential outlet to Asian markets.
“It’s another tragic exit,” said Rafi Tahmazian, a fund manager at Canoe Financial in Calgary. Canada’s oil and gas industry “has been on the defensive for so long now, and it doesn’t get the chance to go on offense, that we’re almost at the point of permanently getting crippled.”
Oil Exits
So far this year, non-Canadian companies have shed more than $20 billion in oil-sands assets, including sales by ConocoPhillips and Royal Dutch Shell Plc. The drumbeat of international exits continued earlier this month, when Apache Corp. sold its assets in the Montney and Duvernay shale plays for C459.5 million ($354 million).
Petronas, for its part, said that the decision to drop the Pacific Northwest LNG project was driven by “prolonged depressed prices and shifts in the energy industry.” The company and its partners remain committed to developing their natural gas assets in Canada and “will continue to explore all options as part of its long-term investment strategy,” according to a statement.
Consulting firm IHS Inc. has said only one of every 20 LNG export terminals planned will actually be necessary by 2025 as demand for LNG slows amid an ever-expanding North American gas supply glut. Qatar, the world’s biggest LNG exporter, plans to double production from the giant North Field, potentially adding to global oversupply.
“LNG is now a global market that is going on everywhere else on the planet,” Tahmazian said. “Canada missed out on that opportunity.”
From Petronas’ Press Release
PETRONAS and its partners have decided not to proceed with the Pacific NorthWest LNG project at Port Edward in British Columbia, Canada.
The decision was made after a careful and total review of the project amid changes in market conditions.
PETRONAS’ Executive Vice President & Chief Executive Officer Upstream, Anuar Taib said, “We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision.”
“We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward,” added Anuar.
PETRONAS’ commitment in Canada continues through Progress Energy Canada Ltd and its world-class inventory of natural gas resources where the subsidiary plays a key role in supporting PETRONAS’ growth strategy in North America.
PETRONAS and the project’s partners are thankful for the support received from everyone involved, especially the area First Nations, the District of Port Edward, the City of Prince Rupert and their communities for their invaluable involvement and efforts in the project.
