Petronas won’t be rushed on project

Needs time for review of Pacific NorthWest approval; ‘categorically denies’ mulling sale of its stake; affected First Nations split

GARY PARK

For Petroleum News

Malaysia’s Petronas is backing away from setting a deadline for a final corporate decision on the Pacific NorthWest LNG project, while emphatically rejecting speculation that it is on the verge of selling its majority stake in the venture.

The state-owned firm said it wants time to consider the 190 conditions for approval imposed by the Canadian government while it conducts a “total review of the proposed project prior to deciding on the next steps forward.”

The muted response fell far short of the fanfare surrounding the conditional green light from the federal government and the enthusiasm expressed by British Columbia Premier Christy Clark.

Outside those circles the consensus view among analysts was that Pacific NorthWest had no hope of proceeding in the current economic atmosphere for LNG, with a Reuters report dangling the prospect of Petronas selling its stake in the C$37 billion undertaking.

Sources quoted by the news agency said Petronas had been weighing a sale for months.

“They are going to be looking at gas prices, costs and returns before they make a final decision,” said one of the sources. “It is a very tough call.”

Divya Reddy, of the New York-based political risk firm Eurasia Group, said Petronas has already put so much into the project, including its C$5.2 billion takeover of natural gas producer Progress Energy, that “I can’t see how they could ever recover it through a sale in current market conditions. But it’s possible they are considering distributing the ownership across the existing partners.”

Petronas offered a cryptic response to the speculation, saying it “categorically denies” a sale is in the works, insisting it will continue to work with its Asian partners (China’s Sinopec, Japan’s JAPEX and Petroleum Brunei) along with the British Columbia government.

First Nations’ issues

The project opponents have vowed to seek a judicial review of government approvals, basing their case on unresolved land claims, with one group emphatic that it will not move off Lelu Island, the site of the liquefaction plant and tanker terminal.

“We’re not going anywhere … that’s a given” declared Don Wesley, a chief who had led an occupation of the island, but the elected council of the La Kw’alaams has expressed interest in a C$1.2 billion benefits package offered by the Petronas-led consortium.

The Kitselas First Nation welcomed the federal approval, saying it is now in a position to benefit from the development, praising the partnership for engaging with aboriginal communities.

Clark said her government will not wait for unanimity among First Nations. “Not everyone in British Columbia is going to agree 100 percent, but leadership means you’ve got to make a decision sometimes,” she said.

Karen Ogen-Toews, chief executive officer of the First Nations LNG Alliance, said the highlight of the federal decision is the conditions that should address “the concerns the First Nations have for environmental impacts … it may be favorable for all of us.”

Shannon McPhail, executive director of the Skeena Watershed Conservation Coalition, which has been in the forefront of opposition to Pacific NorthWest has also worked with indigenous leaders to reduce conflict among aboriginal communities.

“We have come to understand that the values by which people support or oppose pipelines are the same,” she said. “We all want a future for our families.”

McPhail said there are still endless opportunities for governments, industries and communities to pursue alternative energy projects that would ensure First Nations are not held captive to developments such as LNG.