Lelu Stand-off continues

Good-Bad-Ugly-ShowdownInternet rumours about enmeshment with Malaysian Government debt aside, Petronas has in the face of a severe downturn in oil and gas prices, announced an $11.4-billion reduction in capital spending over the next four years. What this means for a long term LNG investment like the Lelu Island LNG terminal is unclear but it was reported on April 29 that Petronas owned Progress Energy, had named Adnan Zainal Abidin, a senior Petronas official, to lead the construction phase of their Pacific NorthWest project. Adnan Zainal Abidin,  is vice-president global LNG for Petronas. At the same time, Petronas executive vice-president and CEO upstream Anuar Taib  was named chairman of the board of Pacific NorthWest LNG and Progress Energy. These high level appointments appear to index a high level of commitment to the Lelu Island project. It may however just be a feint or bluff in this tense stand-off. Although Petronas has made a massive investment in this project to date, their boffins must have figured out the financial bottom line past which it will be unprofitable to keep going. The next move will have to come from the Canadian Environmental Assessment Agency whose seemingly nervous delay puts their report’s release date in June. Image from Mindcontrol.