VANCOUVER: Malaysia's Petronas has proven up about half of the 15 trillion cubic feet (tcf) target for Canadian gas reserves it needs to make a final investment decision on its C$36 billion ($32.9 billion) natural gas export project, Chief Executive Shamsul Azhar Abbas said on Wednesday.
The state-owned oil company plans to drill aggressively through the summer to further prove out its reserves in Western Canada ahead of a final go or no-go decision, anticipated by year-end, on a gas field, pipeline and liquefied natural gas (LNG) export terminal development.
"To date, I am pleased to report that we have already proven approximately 50 percent of our 15 tcf target to reach final investment decision," Shamsul said at an industry conference in Vancouver.
He added that the company plans to have 25 to 30 rigs running throughout the summer on its gas fields in northern British Columbia and Alberta.
Petronas dove into the Canadian natural gas space in 2012 with its C$5.2 billion takeover of Progress Energy Resources and is now racing to develop its Pacific NorthWest LNG project near Prince Rupert in northern British Columbia.
The project is just one of about a dozen LNG export terminals proposed for the province's rugged Pacific coast, as energy companies from around the world scramble to build the facilities to export cheap Canadian gas to Asian markets.
Petronas has vaulted ahead of its rivals, aiming to start construction on the massive development next year, with first shipments in 2019.
"The window to approve, build and deliver the first cargo is short and very tight considering the competition out there," Shamsul said.
In addition to ensuring there are adequate reserves to meet plans to export some 12 million tonnes of LNG per year, the company is still looking for clarity from British Columbia on its proposed two-tier LNG tax.
The province, which is banking on an LNG boom to boost government revenue and create jobs, committed earlier this month to provide certainty to Petronas on all government-related costs by the end of November.
Shamsul warned that project economics remain a key concern for investors and said governments must introduce frameworks to enhance a project's economic viability, such as tax breaks or incentives, rather than policies that inhibit investment.
"Let's not slaughter the goose before it has a chance to hatch the golden egg," he said. "This is a once in a lifetime opportunity for B.C., we must be careful to not squander it away by banking on unrealistic expectations and misconceived perceptions."
($1 = 1.0934 Canadian Dollars) - Reuters
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