Petronas announces it will defer Final Investment Decision on Lelu Island project

North Coast residents will have to try and divine the meaning of a few words to interpret the fate of one of the major LNG projects proposed for the region.

As Pacific NorthWest LNG today issued a statement updating the current progress related to their Lelu Island development.

Following three days of discussions with the Provincial Government to resolve a number of outstanding issues,  the Petronas/Pacific NorthWest LNG comments from today, are sure to catch the eye of many across the North Coast.

With the key aspect of the announcement suggesting that the final Investment date for any go ahead for the 36 billion dollar investment is now a bit further down the line, with no timetable provided as to when that Final Go Ahead will take place.

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Consequently, PETRONAS and its partners have decided to defer the project’s $36 billion Final Investment Decision (FID) pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of the Project and competition from other LNG producing countries. 

Costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive FID can be undertaken. 

At the same time, Pacific NorthWest LNG will continue work to secure necessary regulatory and other approvals from the Government of Canada.  -- Statement from Petronas/Pacific NorthWest LNG deferring any Final Investment Decision on its Lelu Island project

Along the lines of the recent BG Group comments of first prudent and then pause, we now can add the word defer to the LNG lexicon for the North Coast.

With costs apparently a key deal breaker for any decision to come in the future.

As part of the full press release both Petronas officials and the Government made the best of the past there days of discussions on the topic.

With Premier Clark stating: “British Columbia is on schedule to build a liquefied natural gas industry and secure new economic growth, ... I am pleased we have furthered our prospects to supply clean natural gas to international markets by reaching another milestone with Pacific NorthWest LNG.” 

While for their part, Petronas gave a nod to the future hoping for any further outstanding issues to be resolved soon, with an eye on related to the supply window and competitive projects.

 “PETRONAS hopes that all outstanding factors can be resolved as soon as possible to enable the Final Investment Decision to be made within the identified LNG supply and demand window. 

This is vital in light of the current intense market environment and for Pacific NorthWest LNG not to lose out on long term contracts to competitive United States LNG projects,”  -- Petronas CEO Tan Sri Shamsul Azhar Abbas.

And while both sides of the discussion would appear to be painting a positive spin to the developments of the last three days, highlighting hopes of an LNG future for the region.

Today's announcement will no doubt be a disappointment for those in the region that had hopes of a positive decision later this month and forward momentum on the LNG file for the New Year.

You can review the full Pacific NorthWest LNG statement here.

We'll update the story as the day progresses, with further items of interest on the topic of the day.

For some background on the Pacific NorthWest LNG project see our archive page here.

Updates:

Vancouver Sun-- The good ship LNG springs a leak
Vancouver Sun-- Petronas delaying decision on B. C. LNG as oil slump squeezed economics
Vancouver Province-- Petronas delaying decision on B. C. LNG as oil slump further squeezes economics
Globe and Mail-- Petronas delays decision on Pacific NorthWest LNG project
Financial Post-- Petronas postpones investment decision on Pacific Northwest LNG project
Bloomber Business Week-- Canada Gas Project Delay Highlights Oil Plunge's Wider Risk
Bloomberg Business Week-- Petronas Defers $32 Billion Canada LNG project decision
Victoria News-- Petronas LNG delay not due to B.C., Coleman says
CBC-- Petronas puts B. C. LNG plant on hold
Calgary Herald-- LNG deferral by Petronas puts B. C. drilling in question
24 Hours Vancouver-- Petronas delays mega LNG deal
Wall Street Journal-- Malaysia's Petronas Delays Decision on Canadian Gas Export Terminal
CFTK-- Petronas Delaying Decision on Pacific NorthWest LNG Project at Port Edward
Business in Vancouver-- Petronas defers decision on $36 Billion B. C. LNG project
Reuters-- Petronas delays go-ahead for Canadian LNG project, cites costs
News 1130-- Petronas puts the brakes on liquefied natural gas terminal near Prince Rupert
CKNW-- LNG Minister Rich Coleman responds to Petronas pressing pause