Petronas warns of future stagnation in LNG industry

Without sufficient investments, both buyers and sellers face an uncertain future, says group CEO


Petroliam Nasional Bhd (Petronas) warned that the liquefied natural gas (LNG) sector is heading for stagnation, if producers and consumers failed to collaborate to ensure growth and sustainability of the industry.

Its president and group CEO Datuk Wan Zulkiflee Wan Ariffin said while LNG demand has increased, there is a possibility of industry stagnation if LNG prices do not encourage necessary investments to sustain the business.

“Today, players are cancelling and delaying projects in tandem with the LNG prices. Without sufficient investments, both buyers and sellers face an uncertain future in terms of business sustainability and energy security,” he said at the LNG Producer- Consumer Conference 2017 in Tokyo, Japan.

His statement was released by the state-owned oil company yesterday. Petronas is the world’s third-largest LNG producer.

Wan Zulkiflee said Petronas was forced to abandon its proposed LNG project in Canada due to the prolonged depressed prices and unfavourable market conditions.

However, he said the current market dynamics stimulated internal efficiency improvements that have provided Petronas with better agility as an integrated end-to-end LNG player to accelerate growth once the industry is on an upturn.

The national energy company recently celebrated its 10,000th cargo from its Bintulu

LNG Complex in Malaysia, delivered to Japan on Oct 4. This further cements its sterling reputation as a reliable LNG solution producer and supplier with an impeccable track record of not missing a single cargo.

“With deeper resource pools, we are able to invest in people, technology and innovation to provide energy solutions that go beyond just selling and delivering LNG.

“Through these investments, we aspire to help create a more sustainable LNG market that is able to fuel the world’s economies,” he said.

Wan Zulkiflee said all parties should engage in early collaboration to work towards mutually-favourable market conditions to encourage investments for business longevity and long-term supply stability.

“While current market dynamics are not encouraging conversations about sustainable gas pricing, it is in our interest, both as sellers and as buyers, to bring this up.

“Although buyers’ considerations remain in our best interests, the current market volatility necessitates the security of demand.

“This is imperative for the producers to continue invest- ing to support the upstream and LNG value chain in a timely manner,” he said.

Gas prices have plummeted from a high of US$5.39 (RM22.75) on Jan 29, 2014, to US$2.96 on Tuesday. — TMR