KUALA LUMPUR: Stressing that the US$36 billion Canadian LNG project is viable, Petronas s ys the huge venture is a right and long-term investment for the company given that it is now the world’s third biggest LNG player.
Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin also came to the defence of another ambitious Petronas project: the RM60 billion integrated petroleum project, Asia’s largest, in Pengerang, Johor.
The two projects, along with the US$4.5 billion Petronas Floating LNG (PFLNG1 and PFLNG2) facilities now under construction in South Korea, will strengthen the oil giant’s long-term position as a fully-integrated multinational oil and gas corporation.
“This is the right project for Petronas. There are noises but in the long run, we’ve got big resources, we are a big LNG player, we have secured the market,” Wan Zul told the Business Times in an exclusive interview.
“Petronas today is one of the leading LNG producers globally. We are No. 3 today. We have our (LNG) production sites in Bintulu, Egypt and Australia.
“We are a very strong player in the Far East market. We have 18 customers in Japan alone. We also have customers in South Korea, Taiwan and China. So it is important that we maintain this, to be a leading global LNG player going forward.”
Petronas has a 62 per cent stake in the Pacific NorthWest LNG project in Canada, where some Canadian newspapers have tried to create controversy by raising Petronas safety records and other issues.
Wan Zul conceded that there had been some reservations from the Canadian people.
”In terms of safety, just like any other world-class oil and gas company, we do safety audit. This audit was done in 2013. And then whatever findings, we take actions to resolve them. I think what was being published were the findings. We do safety audits and this is a continuous exercise.
“We have explained our position to the Canadian government and also the British Columbia provincial government and they fully understand the situation. We are very transparent. Our belief is that we should not hide anything.”
Wan Zul said there is only one condition remaining, which is the environmental approval. “As soon as we obtain the approvals, the joint-venture will proceed with the project. It is not Petronas alone.
We are hoping to start by first quarter of 2016.” Wan Zul said the Pengerang RAPID (Refinery and Petrochemical Integrated Development) project was on track, with the completion rate at 11 per cent, just one percentage point behind schedule.
“It is a big project. The challenges are big. Maybe the peak (of construction) would be some time in 2017, when we expect about 55,000 people working onsite.
“There will be challenges but I think we are putting in resources to make sure we mitigate all the risks involved and hopefully by 2019 we can have the refinery up. The petrochemical section should be later. There will be no change in the composition of the project except towards the tail end in the petrochemical project. Some of the petrochemical products have changed because ofmarket conditions.
“For this type of project, we have to have a long-term view and how we see the market going forward. We have to stay the course. It is not easy to start this from the ground up.”
The RAPID refinery will have a capacity of 300,000 bpd. It will process imported crude oil. The petroleum products will be for the domestic market to help substitute some of the imported gasoline and diesel now.
Wan Zul said the PFLNG1, now under construction in South Korea, would be commissioned by the first quarter of next year, making Petronas the first oil and gas company in the world to have commissioned such a facility.
“Essentially this will be a floating LNG plant and it will be used to monetise gas from stranded fields. This will be a kind of in-situ liquefaction facility, very close to the reservoir.
“We are a leading LNG player and I don’t think we should lose this position. That’s why the Canada plans fit into our strategy.”
Wan Zul said Petronas’s shipping company MISC would remain a strategic fit to the group because the bulk of the company’s businesses is LNG tankers.
“MISC complements our business as an LNG player. We can produce offshore, we can liquefy it and now we can also transport the gas. It fits into the whole value chain.”
On its involvement in Formula 1 racing, Wan Zul said besides corporate branding purposes, its foray into the business has helped its research work on the lubricant business.
“We have got two staff that follow the team and an onsite laboratory where we analyse the lubricants and we do engine and lubricant designs together, which means the lubricants we designed are specifically for the designated engines.
“We also supply Mercedes first fill with our Syntium lubricants for their AMG cars that roll out of the factory in Germany and in various countries. We will continue this technical partnership through F1.”