PLANT

Petronas commits to $36B LNG plant and pipeline in BC

Malaysia's state-owned oil and gas company looking at 30-year horizon.


NUSA DUA, Indonesia — Prime Minister Stephen Harper arrived in Bali for an Asia-Pacific leaders’ summit Oct. 6 bearing what could be called a $36-billion vote of confidence from Malaysia’s state-owned oil and gas company.

Malaysian Prime Minister Mohd Najib sprung the “gargantuan” investment figure during a joint availability with Harper in Putrajaya, saying Malaysia’s state-owned oil and gas company Petronas has committed to construction of a liquid natural gas plant in British Columbia and the pipeline to feed it.

“I’m told that this is the largest direct foreign investment in Canada by any country,” Najib said, flanked by Harper following a formal welcoming ceremony at a sprawling new government precinct outside the Malaysian capital of Kuala Lumpur.

Najib called it a “significant landmark decision” by Petronas, which last year spent more than $5 billion buying Alberta-based Progress Energy Inc.

The Petronas takeover, and a bigger oil patch buyout by China’s state-owned CNOOC, prompted months of hand-wringing by the Harper government. It approved the deals late last year but at the same time introduced new rules that permit majority takeovers of Canadian companies by state-owned enterprises only in the most exceptional circumstances.

The policy change put a major chill on direct foreign investment in Canada by so-called SOEs, and analysts have recently begun questioning whether the Conservative policy shift is scaring off much-needed foreign capital.

Najib rode to Harper’s defence, calling the promised Petronas infrastructure investment a testament “to the level of confidence we have in the policies of the Canadian government.”

Harper’s reaction to the news was almost muted, by contrast.

“Look, we view the Petronas investments very positively and all the indications I have is that Petronas is looking at further investment,” said the prime minister.

“The government of Canada is very excited about that possibility, as are all those I’ve talked to in the energy sector.”

However the Prime Minister’s Office declined to provide any details of the promised $36 billion investment, referring reporters to Petronas for details. Provincial officials in BC had spoken in June of a $19 billion LNG plant and pipeline investment by Petronas, and it wasn’t clear where the whopping new total comes from.

Regardless, the announcement provides Harper a much-needed shot in the arm as he brings Canada’s trade and investment message to Bali.

Harper has been involved in an increasingly acrimonious and very public tussle with US President Barack Obama over the proposed Keystone XL pipeline to take Alberta bitumen south, and is meeting stiff resistance within Canada to the proposed Northern Gateway pipeline to the BC coast.

The Conservatives have also failed to seal the major trade pacts they’ve been negotiating, and Najib appeared to confirm the proposed Trans-Pacific Partnership, involving 12 Pacific Rim counties including Canada, won’t meet its year-end target for completing a framework agreement.

Najib was asked by a Malaysian reporter what guarantees Petronas had been given on its multi-billion-dollar Canadian investment “over 30 years.”

The investment has a long horizon, Najib agreed, adding he is confident that not only the current Conservative government would support Petronas’s Canadian involvement, but so would future governments.

© 2013 The Canadian Press