KUALA LUMPUR, MALAYSIA – According to three unnamed sources familiar with the matter, Malaysian state oil firm Petronas is considering selling its majority stake in Pacific NorthWest LNG.
In an article from The Financial Post and Reuters, Petronas is said to be weighing options for the project after crude oil prices have fallen more than 50 percent since the middle of 2014, which has hit the company’s profits and prompted cuts to capital expenditure and jobs. The economics of the project, which has taken three years to get approved due to environment concerns have been called into question as the price of natural gas has also dropped more than 70 per cent since 2014.
Petronas was given the go-ahead for the project by the federal government earlier this week. The company stated after Tuesday’s approval that executives would study the project’s 190 conditions and conduct a review before deciding on what to do next. When asked about the potential sale today, Petronas said that it will not provide any additional comment.
The sources said Petronas has been considering a sale for months, after it became apparent that a Canadian approval was possible, but had yet to take a final decision. Other options are also being considered, including putting it on ice.
“They are going to be looking at gas prices, costs and returns before they make the final decision,” said one of the sources. “It is a very tough call.”
Petronas signed on for the project in 2012 through the acquisition of Progress Energy.
Article courtesy The Financial Post/Reuters: http://business.financialpost.com/news/energy/petronas-weighs-sale-to-exit-27-billion-canadian-lng-project-sources-say?__lsa=e709-5cc6.