Petronas considers delaying Canadian LNG project

Concerns about oversupply and cheap competing fuels has pushed Malaysia’s state oil company to consider delaying a Canadian liquefied natural gas (LNG) project, according to sources familiar with the matter.

Petroliam Nasional Bhd., more commonly known as Petronas, has invested around one-third of the estimated US$27.5 billion cost of the Pacific NorthWest LNG project in British Columbia.

Commercial operations were scheduled to begin in 2019. These operations include liquefying natural gas and shipping it from Lelu Island which is a small, uninhabited islet on the Pacific Coast, to energy-hungry Asian markets.

The Canadian government is weighing approval and the next step for the company is to confirm final investment decisions. Other companies involved in the project are Brunei National Petroleum Co., China Petroleum & Chemical Corp., Indian Oil Corp. and Japan Petroleum Exploration Co.

According to reports, oversupply of LNG as well as lower oil and gas prices have rendered the project unattractive at the moment. They declined to say how long the delay might be.

Weaker oil prices had also taken a toll on Petronas. Their first-quarter profit after tax was down 60%  to RM4.6 billion from RM11.4 billion a year earlier.

Other big LNG plans have also been pushed back by other companies like Anglo-Dutch giant Royal Dutch Shell PLC due to the present oil and gas situation.

Earlier this year, Petronas said that it would cut spending by some US$11.4 billion over the next four years and that it was cutting 1,000 jobs.