Petronas to make decision on US$27 bn LNG gas plant in Canada by April

The decision whether to move forward with a proposed US$27-billion liquefied natural gas (LNG) plant by Malaysian oil and gas company Petroliam Nasional Berhad (Petronas) on Canada’s Pacific Coast is expected to be finalized by April 2018, according to Rich Coleman, British Columbia’s minister of natural gas development.

Petronas won conditional Canadian government approval in September after more than three years of regulatory review. Coleman said the company is in the process of reassessing the project’s costs, including those of steel, pipes and other inputs.

“They need to go out and re-price the project,” Coleman said in an interview in Vancouver. “They hope to have that done in three to six months. Once they’ve done that, they’ll go back to the partners and decide whether to make a final investment decision.”

Canada relies on the US to buy almost all of its energy exports, forcing it to sell at a discount to international benchmark prices. British Columbia is positioning itself as a gateway for Asian exports with its vast reserves and is among North America’s closest ports to the region. Petronas is reviewing the project and working to lower capital costs, it said.

Petronas is the majority owner of the Pacific Northwest LNG project, which could produce as much as 19.2 million tons a year of the fuel, or about 8% of last year’s global trade. Its partners are China Petrochemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. and Brunei National Petroleum Co.

Coleman, who met with Petronas executives last month in Kuala Lumpur, said those partners remain on board as buyers. “There was no indication that any of the partners aren’t still in,” he said. “They have a really strong focus on getting it to be financially viable.”

The approval from Canadian Prime Minister Justin Trudeau’s government which came in September 27 was accompanied by around 190 conditions, including a cap on carbon-gas emissions. None of those were “overly surprising” to Petronas or its partners and are unlikely to be a major obstacle, Coleman said.