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Petronas May Make Tactical Retreat on Pacific Northwest LNG site


Malaysia’s national oil and gas company, Petronas, may try to duck at least some of the opposition to its proposed $36 billion Pacific Northwest LNG liquefaction and export terminal near Prince Rupert, British Columbia by moving it from environmentally sensitive Lelu Island to nearby Ridley Island.

Ridley Island is already home to a “seven days per week, 24 hours per day” coal export terminal, shipping Canadian and American coal to Asian markets, according to the federally-owned port’s website. Until earlier this year, Royal Dutch Shell had also planned to build an LNG export terminal on the island. Last month, it announced it was shelving the plan.

Petronas’ investment, if it went ahead, would be one of the largest ever by the private sector in British Columbia. But the company has come off a record-losing financial year, and there has been speculation that at the very least it will slow-walk the Pacific Northwest project as long as low prices in world markets reflect a global gas supply glut.

“While Petronas has yet to make a financial decision to move forward with its Pacific Northwest LNG project, Shell’s Ridley Island site ‘could be one of the options’ for a location for the complex,” CEO Wan Zulkiflee Wan Ariffin said in an interview reported by Bloomberg.

The highly-hedged statement reflects the fact that “Petronas is also undertaking a review of all its assets,” Bloomberg said. Wan Zulkiflee told the outlet that “if they don’t fit, then we will have to look at options on how to improve them or divest them.”

The Malaysian state company’s profits plunged by 96% in the first three months of last year, and its Prince Rupert project faces multiple legal challenges that are unlikely to be mitigated by the move from Lelu to Ridley Island. If the proposed gas liquefaction plant were built, the 9.2 million tonnes of carbon pollution it released every year would also make it impossible for British Columbia to meet even its unambitious emission targets.

Petronas’ CEO sees no need to rush his decision. The inland B.C. gas fields that Petronas bought at the same time as it began to plan its LNG terminal are delivering badly-needed revenue, even without an export terminal. “We are producing around half a billion standard cubic feet a day that we are selling into the domestic market,” said Wan Zulkiflee. “We are earning cash.”