Petronas considering Pacific NorthWest LNG delay: Wall Street Journal
A report from the Wall Street Journal Tuesday morning suggests Petronas could delay a final investment decision on Pacific NorthWest LNG.
Citing two unnamed sources “familiar with the matter,” the Journal says a glut of gas on the world market, coupled with low oil and gas prices has “rendered the project unattractive at the moment.”
Though the sources did not say how long the delay could be, it follows on a previous Alaska Highway News report that the Malaysian oil and gas giant likely won’t make a final investment decision on Pacific NorthWest until June 2017, after British Columbia’s next general election.
Weak oil prices have hit Petronas’ bottom line hard–its first quarter profit dropped a staggering 60 per cent this year from last, from an estimated $3.6 billion CAD to $1.4 billion, according to the Journal. Petronas is expected to release its second quarter results on Aug. 22.
Soft LNG prices since 2014 are expected to remain as new supply from the United States, Australia, and Russia is brought into the market over the next five years, according to the Journal.
Last year, Petronas and its partners gave Pacific NorthWest LNG conditional approval contingent on approval by the B.C. legislature and an environmental certificate from the federal government.
While the project has secured B.C. government approval, it remains under review by the Canadian Environmental Assessment Agency. A decision expected in September.
According to the Journal, Petronas has already “put up roughly a third” of the project’s $36-billion cost, which includes the cost of what it paid in 2012 to acquire Progress Energy.
Progress has spent $5 billion proving wells in the Montney over the past three years. The environmental assessment delays, however, earlier this year forced Petronas to cut $11.4-billion in capital spending across its portfolio.
Progress had planned to spend $5 billion over the next five years, but that was cut to $500 million over the next two years as a result of the cuts.