Petronas taking stake in LNG Canada: energy minister

Petronas CEO Wan Zulkiflee. Image: Petronas

Petronas is taking a stake in the LNG Canada project in Kitimat, Business in Vancouver has learned.

When Petronas announced last year that it was pulling the plug on its $36 billion Pacific NorthWest LNG project, but keeping its upstream assets in B.C., a number of industry insiders and analysts speculated Petronas would eventually resurface in B.C. with some other LNG project.

Petronas cancelled its $36 billion project in Prince Rupert in July 2017, just a couple of months after the NDP came to power through an agreement with the Green Party.

Some viewed the decision to be a vote of non-confidence by industry in the new NDP government, even though Petronas officials insisted the decision was strictly based on market conditions.

In a recent interview with Business in Vancouver, Michelle Mungall, minister of Energy, Mines and Petroleum Resources, let it slip that Petronas was taking a stake in LNG Canada.

Asked about the perception that B.C. was sending international investors some negative signals, Mungall pointed out that Petronas made it clear when it cancelled its PNW LNG project that it was due to market conditions, and did not blame the new government.

“That wasn’t about government as regulator, or their relationship with First Nations whatsoever,” Mungall said. “That was purely a pricing issue for them.

“And to fully emphasize that point, Petronas is now investing in LNG Canada’s project,” she added.

Neither Petronas nor LNG Canada have confirmed the deal.

LNG Canada referred questions to Shell Canada. Shell is the majority stakeholder in a joint venture that includes PetroChina, Kogas and Mitsubishi. In an email to BIV, a Shell Canada spokesperson wrote: "It is our long-standing policy not to comment on commercial matters."

Petronas has not yet responded to questions from BIV.

In a recent interview with BIV reporter Haley Woodin in Malaysia earlier this month, Petronas upstream CEO Anuar Taib did not mention any particular projects, but made it clear his company was still very much interested in B.C.’s LNG opportunities.

He also confirmed that his company’s decision to pull the plug on PNW LNG was based strictly on market forces.

“The market just changed completely so because of that we had to cancel the project,” he said. “But we’re not stopping. We continue to look for different opportunities.”

It has also been reported that Petronas is one of the potential buyers of Chevon’s Kitimat LNG project – something Taib would not confirm.

“Too early to say anything or to give any views on any of those,” he said, when asked about the Chevron sale. “ We will update our position as we have a more firm position.”

The B.C. NDP government has taken steps to make B.C. more competitive by scrapping a special LNG tax imposed on the nascent industry by the previous Liberal government.

Last week, LNG Canada announced the conditional award of an engineering, procurement and construction contract to Fluor Corporation and Japan’s JGC Corp. to design and build LNG Canada’s liquefied natural gas plant in Kitimat.

— Business in Vancouver

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