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Petronas denies reports it wants to bail from LNG project

Last Updated Sep 30, 2016 at 11:19 pm PDT

Pacific NorthWest LNG’s marine terminal (Source: Pacific Northwest LNG Facebook)

While Petronas insists it's still committed to BC's LNG industry, an expert says it has a 40 % chance of getting started

Soft prices will be a challenge to get LNG industry off and running in BC, despite reassurances provided by Petronas.

VANCOUVER (NEWS 1130) – The Malaysian state-owned oil firm Petronas denies a report that the company was considering selling its stake in a multibillion-dollar liquefied natural gas project in BC.

A statement from Petronas says it remains committed to working with its partners following a conditional approval from the federal government for the proposed Pacific NorthWest LNG project.

But experts says it’s looking less and less likely the plans will get off the ground.

Low prices for LNG on Asian markets are the big problem, and Asia is the destination for BC LNG.

At one time, the price was $14 a million BTU in Asia – but now it’s more like $4.

SFU associate professor of earth sciences Shahin Dashtgard says other countries are gaining a foot-hold in the industry.

“Australia has brought on some very big LNG plants, which are about five times the size of what Canada is proposing. So lots of capacity and lots of production have taken the bottom out of the market.”

Our relative proximity to Asia is considered a competitive edge for BC.

Yet, Dashtgard doubts the project will ever get off the ground.

“Right now I would say the chance of success that Petronas will move forward with this particular project is about 40 per cent. I think the economics aren’t that great. It will be interesting to see what they will do in the next six to eight months.”

A news report indicated Petronas was pondering selling its stake, which the company says it “categorically denies.”

BC’s Ministry of Natural Gas Development previously said in an email that it spoke with Petronas and was reassured about the company’s involvement in the proposed LNG export terminal.

The federal government gave a conditional approval earlier this week to the $36-billion venture, which is located on Lelu Island near Prince Rupert on B.C.’s northern coast.

The facility is designed to ship 19-million tonnes a year of liquefied gas over the next quarter century, though low commodity prices have delayed forward movement on the project.