Petronas CEO to meet Canadian officials to conclude LNG investment

Petronas CEO Shamsul Azhar Abbas will meet with British Columbia officials in Vancouver to resolve ‘loose ends’ of the Pacific NorthWest LNG project. — Reuters pic
Petronas CEO Shamsul Azhar Abbas will meet with British Columbia officials in Vancouver to resolve ‘loose ends’ of the Pacific NorthWest LNG project. — Reuters pic

KUALA LUMPUR, Nov 28 — Petroliam Nasional Bhd, Malaysia’s state-owned energy company, said most issues hindering its Canadian liquefied natural gas project have been resolved and a final investment decision will be made by the end of next month.

Chief Executive Officer Shamsul Azhar Abbas will travel to Vancouver tomorrow to meet with British Columbia officials to work out the “loose ends,” he told reporters today in Kuala Lumpur. The project is slated to start operations in 2018.

“We are going to sit down together and discuss firmly so that clarity is given,” Shamsul said. “We have the balance of one quarter of issues at hand. We reckon we can sit down and strike a solution.”

Petronas said this month it will work closely with British Columbia to ensure the project’s viability after the provincial government slashed by half a proposed levy on LNG terminals. The tax cut will have positive impact on the economics of the development known as Pacific NorthWest LNG project, the Kuala Lumpur-based company said November 12.

Brent crude futures slumped to the lowest since 2010 after the Organization of Petroleum Exporting Countries refrained from cutting production when the group met in Vienna yesterday. Contracts for January settlement fell 6.7 per cent to US$72.58 in London yesterday.

Oil tumbled into a bear market this year as the US pumped the most in more than three decades, fuelled by a shale boom, and conflict in the Middle East and Ukraine failed to disrupt supply.

Profit falls

Petronas reported a 14 per cent drop in third-quarter profit today as crude oil prices weakened. Net income fell to RM12.4 billion (US$3.7 billion) in the three months through September from RM14.5 billion a year ago. Revenue declined 1.3 per cent to RM80.4 billion.

Petronas may review its planned RM300 billion capital expenditure over five years because of falling crude prices, Executive Vice President Wee Yiaw Hin said this month. The spending plan was announced in 2011.

The company will cut next year’s capex by as much as 20 per cent, Shamsul said today. Brent is projected to average US$70 to US$75 per barrel in 2015, he said. Falling crude prices is eroding the company’s ability to pay dividend to the Malaysian government next year after a pay-out of RM29 billion in 2014, he said.

The British Columbia government granted environmental permits this week to Petronas’ LNG export terminal and the pipeline linking it to the inland gas fields, according to a statement from the Ministry of Environment. The project is also the subject of a federal environmental assessment, the ministry said.

Petronas sold a 15 per cent stake in Pacific NorthWest LNG to China Petrochemical Corp, or Sinopec, in April. This followed earlier stake sales to Japan Petroleum Exploration Co, Indian Oil Corp and Brunei National Petroleum Co. Petronas has said it aims to reduce its share in the development to as low as 50 per cent. — Bloomberg

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