Petronas calls for equitable relationship between LNG sellers, buyers

PETALING JAYA: Petroliam Nasional Bhd (Petronas) is calling for a more equitable relationship between producers of liquefied natural gas (LNG) and its consumers to ensure the continuity and sustainability of the LNG business.
In a statement yesterday, Petronas vice-president of LNG marketing, Ahmad Adly Alias, said both parties have a responsibility towards sustaining a fair balance in the market that would mitigate the impact of cyclical LNG price movements on all stakeholders.
“Currently, there is a perception that the LNG market will be oversupplied for a long time, prompting many buyers to demand better commercial terms from sellers.
However, if LNG prices continue to be depressed, there might be a possibility that some producers might pull the plug on LNG projects that have not gone through with their Final Investment Decision (FID),” he said while co-chairing the LNG 18 Conference session themed “The Changing LNG Supply & Demand Landscape”.
Adly added that the anticipated project deferments due to the unfavourable price situation will only lead to future tightness in the market that will not be favourable to all stakeholders.
“While buyers are taking advantage of the current depressed market to save cost, in the long run, they must allow prices to return to a more equitable level to support producers in bringing supplies on stream.
“In the long run, the demand curve will gradually match the LNG supplies available in the market and reach some level of equilibrium,” he said.
Adly urged all parties to view the LNG business as a long-term pillar towards ensuring the energy security for nations and economies around the world that are depending on a continued and sustainable supply of affordable and clean energy.
He called upon all parties to leverage on the long-term business relationship that has always been at the heart of the LNG business and ensure that producers are not overly penalised by the current low price environment.
“We are a long-term player in an industry with a long term horizon, (and) to ensure the sustainable growth of the world’s LNG market, we need to have an equitable partnership between buyers and sellers... this enables suppliers to ensure security of supply, well into the future.
“Petronas is in a unique position as a seller and buyer of LNG. With our fully integrated operations, we are able to add value to the resources and enable ourselves to be flexible in our offerings to the markets,” said Adly.