Petronas warns of stagnation in LNG industry

PETALING JAYA: Petroliam Nasional Bhd (Petronas) cautioned that the liquefied natural gas (LNG) industry will remain stagnant if LNG prices do not encourage necessary investments to sustain the business, even though demand for LNG has grown.
“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,” Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin said at the LNG Producer-Consumer Conference 2017 in Tokyo, Japan, today.
Hence, he is urging producers and consumers of LNG to collaborate towards encouraging growth and sustainability of the industry.
Currently, Petronas is the world’s third largest LNG producer.
Wan Zulkiflee highlighted that Petronas was not forced to not proceed with its proposed LNG project in Canada due to the prolonged depressed prices and unfavourable market conditions.
However, he said the current market dynamics have 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.
Wan Zulkiflee is calling on all parties to 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 investing to support the upstream and LNG value chain in a timely manner,” he added.