One of the partners in British Columbia’s massive LNG Canada megaproject, Malaysian state fossil Petroliam Nasional Berhad (Petronas), is planning to cut global oil and gas production and expand its presence in solar and wind after posting a US$5.06-billion loss between April and June of this year.
“Petronas, the world’s fourth-largest exporter of liquefied natural gas, has already flagged production cuts and cost savings to mitigate the impact of the pandemic,” Reuters reports. “It will now seek to expand its renewable energy portfolio, and reassess its oil and gas positions.”
There was no indication in the Reuters dispatch Friday whether the LNG Canada project would be affected by Petronas’ cost-cutting moves. Shipping industry newsletter TradeWinds reported yesterday that Petronas “has approached shipbuilders for a series of up to six LNG carrier newbuildings to lift cargoes from the C$40-billion LNG Canada project in British Columbia.” And at the opening of the virtual Gastech 2020 conference yesterday, Canadian Natural Resources Minister touted “cleaner” LNG as part of the “ambitious green agenda” Prime Minister Justin Trudeau promised for the upcoming Speech from the Throne.
O’Regan “said the best path to a healthy, low-emission economy includes Canada making natural gas a greener product that can be sold overseas—mainly to Asian nations—to replace coal as a source of electricity,” the Vancouver Courier reports. “That includes developing better carbon capture and storage technology, as well as investing in research and commercialization to come up with new ways to get gas to be more sustainable.”
But apart from the leap of technological and economic faith in that promise, O’Regan’s plan also assumes a decades-long market for Canadian fracked gas in Asia. And the statement from Petronas CEO Tengku Muhammad Taufik Tengku Aziz matched up with other recent news reports showing a surge in renewable energy investment in the Asia-Pacific region, even as renewables subsidies decline.
“Petronas has endured a very challenging first half of the year, and we expect our performance to be affected by the volatility of oil prices, which continues to be exacerbated by the uncertainties brought about by the ongoing COVID-19 pandemic,” Tengku Muhammad Taufik said.
He added that the company “sees the biggest opportunities in solar and wind energy in the Asia Pacific region,” Reuters says, and “has formed a team to look into developing a ‘higher value’ portfolio”.
Over the weekend, New Straits Times said the Malaysian state fossil is expected to recover well after posting its first quarterly loss since 2015. “This is fine, but expect Petronas’ revenue and earnings to bounce back very sharply,” IQI Chief Economist Shan Saeed told the paper. “Its profit will go up in the third and fourth quarters.”
Apart from the unpredictability of the pandemic and its economic repercussions, a report last week in the Bangkok Post and the Wall Street Journal noted that Asia already accounts for half of the world’s renewable energy capacity, with lots of room to grow.
Analyst firm Wood Mackenzie “expects investment in renewable electric power in the Asia-Pacific region to outpace investment in fossil fuel power such as coal and natural gas every year for the next five years,” as energy subsidies fall off but energy demand keeps rising, the Post and the Journal wrote. “With much of the fossil fuel investment going toward replacing old facilities, that means the lion’s share of added capacity is likely to come from renewables.”