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Najib Razak, the former prime minister of Malaysia, warned that the country is headed for an economic collision of massive proportions should ICE Brent Crude contracts trade below $70. As of Friday, Brent Crude contracts settled at 70.18, which he also warned that Moody’s decision to downgrade the country’s credit rating to negative could be imminent.

The former prime minister, who was previously arrested in July for involvement in the 1MDB scandal, explained in a Facebook post that the recent bear market in oil would see the country’s deficit explode and the Malaysian ringgit continue to depreciate as the Federal Reserve signals further rate hikes.

“The pressure on the government’s fiscal position will double,” Razak warned.

This, Razak said, the country would have to issue a higher dividend to cushion the shortfall in revenue for Petronas, the country’s national petroleum company.

In doing so, he said that could severely impact Malaysia’s credit rating for 2019.

“This is when oil prices are said to be high and stable. But what if oil prices drop?… What buffer do we have to cushion an oil crisis, if it happens again?,” he questioned.

On Thursday, Moody’s affirmed the A1 domestic issuer and foreign currency senior unsecured ratings of Petronas but altered its outlook from stable to negative.

“The rating agency also affirmed the A1 rating for Petronas Capital Ltd’s senior unsecured notes and the US$15 billion medium-term note (MTN) programme as well as sukuk issued through Petronas Global Sukuk Ltd, but changed its outlook to negative from stable.

Moody’s said the rating action was due to the government’s announcement that Petronas would be paying RM26 billion in dividends in 2018 and RM54 billion (inclusive of a one-off special dividend of RM30 billion) in 2019,” Free Malaysia Today.

…click on the above link to read the rest of the article…

Another Industry Reported Quake in BC’s Fracking Grounds 

August 21, 2015

Another Industry Reported Quake in BC’s Fracking Grounds 

Regulator says tremor likely industry-caused, but company says it’s too soon to say.

Progress Energy, an arm of the Malaysian oil company Petronas, temporarily shut down operations at a wellsite after a 4.5 magnitude earthquake hit an area 114 kilometres northwest of Fort St. John on Aug. 17.

B.C.’s oil and gas regulator said the earthquake was likely caused by hydraulic fracturing but “has yet to determine the cause of the event.” Progress Energy reported the tremor on Monday. No damages were reported to the regulator.

“The Commission is working to obtain a reasonable event depth from local seismic-monitoring data and is collecting more information about the event as part of its investigation,” B.C. Oil and Gas Commission spokesman Allan Clay told The Tyee.

David Sterna, Progress Energy’s director of external affairs, said the company has since resumed operations with approval from the regulator, and that “despite certain media speculation, it is too early to determine whether Monday’s seismic activity was a natural occurrence or related to hydraulic fracturing activities.”

The epicentre of the earthquake occurred three kilometers from a site where Progress Energy was conducting a multi-stage frack into the Montney Shale, a large swath of land stretching across northeast B.C. into northwest Alberta.

In B.C., any fracking operation that measures a magnitude 4.0 tremor or greater within a three kilometre radius of the drilling pad must report the event to the regulator and suspend operations. Alberta operates a similar “traffic light” system for earthquakes in the Duvernay Shale around Fox Creek, Alberta.

That region, which has experienced industry-made quakes for two years, saw a 2.6 tremor in early August.

The shale gas industry injects fluids and sand at high pressure into deep and shallow wells to crack open difficult oil and gas deposits. The injections create a network of cracks that can also connect to water zones, other industry wellsites and faults.

The reactivation of these faults can then trigger an earthquake, sometimes days after the fracture treatment, scientists say.

…click on the above link to read the rest of the article…

LNG Project Would Affect ‘Grand Central Station’ for Salmon, Researchers Say

August 13, 2015

LNG Project Would Affect ‘Grand Central Station’ for Salmon, Researchers Say

Science letter asks gov, industry to acknowledge ‘full impacts’ of BC project.

The proposed Pacific Northwest LNG project and related pipelines located at the mouth of the Skeena River in northern British Columbia would affect more than 40 different salmon populations harvested in at least 10 First Nation territories, according to a letter published in Science.

 That is twice the number of First Nations groups that industry proponents identified as needing to be consulted about the impacts of the project, add the researchers who signed the letter.

Pacific Northwest LNG is an international consortium led by Malaysia oil giant Petronas. If approved by an ongoing federal environment assessment, its $11-billion liquefied natural gas terminal would be built on Lelu Island near Prince Rupert.

The waters surrounding the proposed project are critical for the rearing of millions of wild B.C. salmon — an estuary that Allen Gottesfeld of the Skeena Fisheries Commission calls “the Grand Central Station for salmon.”

The letter, penned by fisheries biologists, First Nations leaders from throughout the Skeena River watershed, and Simon Fraser University professor Jonathan Moore, cites research that shows “industrialized estuaries depress salmon survival.”

Moore, an aquatic ecologist, explained that the purpose of the letter was to get the Canadian Environmental Assessment Agency (CEAA) to properly consider the new data on the importance of the estuary for one of the world’s great salmon watersheds.

“This little local spot supports all of these fish from all around,” said Moore. As a consequence, he said, the LNG terminal could “affect populations of salmon 10 kilometres away or 400 km away in the headwaters. What happens in the ‘Central Station’ affects the whole transportation system for salmon.”

In addition to presenting new biological data, the letter asks that government and industry acknowledge the full impacts of the project on salmon, the watershed, and aboriginal communities that depend on both.

…click on the above link to read the rest of the article…

Petronas’s Silence on BC LNG Act Sends Disquieting Signal

August 4, 2015

Petronas’s Silence on BC LNG Act Sends Disquieting Signal

Busy passing project terms, BC forgot to check on events abroad.

As the British Columbia legislature passed its “historic” Liquefied Natural Gas Project Agreements Act on July 21 after a lively eight-day debate, the most important player for which the special summer session of Parliament was convened kept an aloof — and worrying — silence.

Petronas, the Malaysian state energy firm with a 62 per cent stake in a consortium proposing to build a US$36-billion LNG project near Prince Rupert, did not offer a public thank you or congratulatory statement to the B.C. government of Premier Christy Clark for its efforts and hard-earned legislative victory.

The Pacific NorthWest LNG (PNW) consortium’s other shareholders, Sinopec (10 per cent), Indian Oil Corp (10 per cent), Japan Petroleum Exploration (10 per cent), China Huadian (five per cent) and PetroleumBrunei (three per cent), have been equally quiet.

It was left to PNW to issue a brief statement that the act — followed by the July 23 ratification of 25-year agreement terms covering royalty, income tax credits and carbon emissions — “brings us one step closer to building Canada’s first world-scale LNG facility.”

“The remaining condition of our final investment decision, environmental approval from the government of Canada, is being worked on diligently with First Nations, stakeholders and government representatives.”

Petronas’s silence is significant as B.C.’s elaborate undertaking to create, debate and pass the LNG act had been made in direct response to the company’s high-profile complaints and threats to call off the project if it did not receive legal certainty and the offer of generous investment terms. Petronas did not reply to a request for comment on B.C.’s new act.

…click on the above link to read the rest of the article…

BC’s Gas Export Hopes Face ‘Scandal that Ate Malaysia’

July 24, 2015

BC’s Gas Export Hopes Face ‘Scandal that Ate Malaysia’

Asian nation’s PM, key to $36 billion LNG bid by Petronas, in corruption probe.

The prime minister of Malaysia, who is central to British Columbia’s liquefied natural gas development ambitions, is the subject of a major financial corruption scandal rocking his country.

Earlier this month The Wall Street Journal, citing documents from government probes, reported that investigators suspected that almost $700 million in cash had been wired through state agencies, banks, and companies linked to 1Malaysia Development Berhad (1MDB).

The company is a state-owned development vehicle chaired by Malaysian Prime Minister Najib Razak, who also serves as the country’s treasury minister.

Investigators believe the $700 million eventually found its way into Najib’s personal accounts and served as a slush fund for the last election. Malaysia has few rules on campaign donations or election spending.

Najib is the top authority overseeing Malaysia’s state-owned oil company Petronas, whose massive potential investment in B.C. liquefied natural gas (LNG) was greenlit by the provincial legislature earlier this month.

Now, The Australian and other news sources are saying reports of corruption have paralyzed the Malaysian government. “The scandal that ate Malaysia” is how U.S. business news agency Bloomberg is dubbing the financial brouhaha.

The debacle threatens to undermine the nation’s economy, according to an expert writing for East Asia Forum: “Malaysia’s international credibility is on the line, as is its currency, access to foreign capital and future economic prosperity.”

To date a task force investigating the 1MDB allegations has already frozen half a dozen bank accounts in Malaysia.

Petronas key to Clark’s LNG ambitions

In May of 2014, Premier Christy Clarksat for a photograph with Najib, central to any deal she sought with Petronas. The meeting was part of an eight-day trip to Malaysia and Hong Kong to promote LNG development after Clark made election campaign promises that LNG would create 100,000 jobs and erase the province’s debt.

…click on the above link to read the rest of the article…

Nine LNG Questions for British Columbians to Ask Their Politicians

July 22, 2015

Nine LNG Questions for British Columbians to Ask Their Politicians

Pressing queries in light of high-stakes Petronas agreement just passed.

The British Columbia legislature has just ratified a long-term agreement to lower royalties and taxes for a $38-billion liquefied natural gas project proposed by Malaysia’s state-owned oil company, Petronas.

Pacific Northwest LNG, a consortium that includes Petronas and Chinese refining giant Sinopec, intends to build an export terminal on Lelu Island near Prince Rupert. The Lax Kw’alaams have opposed the project as a threat to salmon and the Skeena River.

The unprecedented agreement, which critics havecharacterized as a crass economic giveaway, guarantees Malaysia’s state-owned company low royalties and low taxes for LNG over a historic 25 years.

Martyn Brown, former chief of staff to B.C. premier Gordon Campbell and a top strategic advisor to three provincial party leaders, has described the agreement as “environmentally reckless, fiscally foolhardy and socially irresponsible.”

The deal effectively makes it difficult for future governments to set LNG-specific carbon taxes or to impose new environmental rules aimed at curbing greenhouse gas emissions. It locks in tax credits for 25 years. And it offers no job guarantees for British Columbians.

In addition to the terms of the agreement, politicians and citizens should now be asking nine critical questions about any LNG development in the province.

1. Have LNG projects become uneconomic?

Many LNG analysts now think the world is oversupplied with the product and that price volatility warrants project deferrals, especially for high-cost proposals in North America. Othersreckon that capital for major projects is rapidly drying up. Carbon Tracker, a non-profit group of financial analysts concerned about climate change, justreported that investors will likely mothball tens of billions of dollars in LNG investment because “there is a finite amount of fossil fuels that can be burnt over the next few decades if we are to prevent dangerous levels of climate change.”

…click on the above link to read the rest of the article…

BC LNG Deal Lets Petronas off Hook for Two Kinds of Emissions

July 18, 2015

BC LNG Deal Lets Petronas off Hook for Two Kinds of Emissions

Carbon ‘free pass’ imperils BC’s climate targets, say critics.

The B.C. government plans to subsidize Malaysian gas giant Petronas to the tune of $16 million, in part due to a promise to exclude a significant chunk of the greenhouse gas emissions from the Pacific NorthWest LNG project from compliance penalties, DeSmog Canada has learned.

British Columbia’s politicians are in a special summer sitting at the legislature right now to debate Bill-30, the Liquefied Natural Gas Project Agreements Act, which will allow the government to enter into a $36-billion agreement with Petronas and pave the way for B.C.’s first major liquefied natural gas export plant, located near Prince Rupert.

Under the terms of the 140-page deal, the province would compensate Pacific NorthWest LNG if future governments raise income tax rates for LNG operations, add carbon taxes that specifically target the industry, or make changes to rules on greenhouse gas emissions. That could result in the provincepaying out $25 million a year or more.

While the compensation clause has commanded the lion’s share of attention, DeSmog Canada has learned that the B.C. government has quietly excluded two sources of Petronas’ carbon emissions from compliance standards, which will result in the province paying out millions of dollars in subsidies.

‘Under the radar’ change

In promising the world’s “cleanest” LNG facilities, Premier Christy Clark set benchmark requirements for the facilities’ carbon emissions. If a company fails to meet the benchmark, they must pay compliance penalties into a climate offset or green technology fund.

However, the province has also created an incentive program, which promises to pay a significant portion — between 50 and 100 per cent — of those compliance fees if companies come close to meeting the benchmark.

…click on the above link to read the rest of the article…

Who Is BC’s Big LNG Partner? A Petronas Primer

May 21, 2015

Who Is BC’s Big LNG Partner? A Petronas Primer

Group led by Malaysia’s national oil company aims to build terminal near Prince Rupert.

Just one week after the Lax Kw’alaams band rejected a $1-billion offer by Petronas to build a liquefied natural gas terminal at the mouth of the Skeena River in British Columbia, Premier Christy Clark has signed an agreement with Malaysia’s national oil company to “establish the path to a final investment decision on the project.”

Part of that path includes a long-term commitment by the provincial government not to raise natural gas royalties, regardless of changes in global prices for the commodity.

Natural gas, like oil, is one of the world’s most volatile commodities in price.

“With this certainty, industry can plan their operations over a longer period of time and commit capital to jobs and production needs, while the Province has a guaranteed royalty revenue each year,” said a government news release.

Pacific NorthWest LNG, which is largely owned by Petronas, has yet to make a final investment decision, and the proposed multibillion-dollar project near Prince Rupert must still pass an environmental review.

Just what kind of company is Petronas, and what’s its relationship to the Malaysian government? The Tyee looked at the public record.

1. The government of Malaysia set upthe national oil company in 1974 when oil prices jumped from $1.50 to $12. The government did so with the goal of safeguarding “the sovereign rights of Malaysia and the legitimate rights and interests of Malaysians in the ownership and development of petroleum resources.” The company’s success has helped the government to reach out to the Muslim world.

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Canadian LNG Export Future Delayed, But Not Dead Yet

May 19, 2015

Canadian LNG Export Future Delayed, But Not Dead Yet

As the Lax Kw’alaams community rejected a $1 billion offer from Pacific NorthWest LNG as compensation for a proposed natural gas project this week, the global energy community took notice. With the native tribe turning down such an enormous sum of money, the rejection could put a chill on Canada’s energy investment prospects. Worse, it also raised the possibility that Canada would be shut out of the vast Asian markets that it needs to offload the natural gas the United States no longer wants. But the reality is more nuanced than that.

Community engagement has become far more important for oil and gas projects, and in accordance with international best practices, indigenous communities should be involved in a process of free, prior, and informed consultation. Cases in Canada, and across the Western Hemisphere, have shown that agreement between governments, private firms, and indigenous communities is possible. And when done well, everyone stands to gain.

Pacific NorthWest LNG, which is owned by Malaysian national oil company Petronas plus Sinopec, JAPEX, Indian Oil Corporation, and Petroleum Brunei, has been negotiating with the Lax Kw’alaams band council since 2011. The major point of contention is over the impact of the project on local fisheries, in particular salmon. Both sides have commissioned environmental reviews that come to different conclusions. Pacific NorthWest has offered to build a bridge it argues will protect the area, but the community is dissatisfied with the solution. The Canadian Environmental Agency’s own review is due later this year.

…click on the above link to read the rest of the article…

Petronas Hoping To Buy First Nations Tribes’ Support For $1 Billion

May 11, 2015

Petronas Hoping To Buy First Nations Tribes’ Support For $1 Billion

Petronas is willing to pony up nearly $1 billion to secure the support of First Nations tribes in western Canada for its natural gas export project. The Malaysian state-owned oil company is offering C$1.15 billion (USD$950 million) to the Lax Kw’alaams tribe in order to build an LNG export facility at the Prince Rupert port.

The offer would consist of annual payments over 40 years. For example, Petronas would pay over $12 million in the first year, with payments rising by 1 to 5 percent annually (depending on production), culminating in a $50 million payment in the 40th year. Also, tribe members would have a sort of preferred status for open jobs at the Petronas’ Pacific Northwest LNG facility. The offeramounts to about $320,000 per person. The Lax Kw’alaams tribe will vote on the offer in May.

The tribes argue the price is hardly exorbitant. When one considers it will be spread over 40 years and the project will result in large land use impacts on local communities, the $1 billion is a fair price. “This will be a real game-changer for many First Nations in terms of how they can build their future,” John Rustad, the Aboriginal Relations and Reconciliation Minister in British Columbia, told the Globe and Mail in an interview on April 30.

Interestingly, it could create a new benchmark for major fossil fuel projects on indigenous lands. For other projects to move forward, affected tribes could use the pending offer for the Lax Kw’alaams as leverage.

The big offer from Petronas is somewhat of an afterthought for the C$36 billion proposal. That steep price tag has forced a rethink within the Malaysian company. In December 2014, Petronas decided to put off a final investment decision, hesitating to commit that much money to an LNG export project during a period in which LNG markets are not doing so well.

…click on the above link to read the rest of the article…

Is The Canadian LNG Export Dream Dead?

December 7, 2014

Is The Canadian LNG Export Dream Dead?.

Lower oil prices have killed off major plans for liquefied natural gas exports from Canada’s west coast.

On December 2 the state-owned oil company of Malaysia, Petronas, decided to shelve plans to build an enormous LNG export terminal in British Columbia, citing the falling price of oil. It is common for LNG contracts to be priced using a formula linked to the price of crude oil, so declining oil prices pushes down prices for LNG.

Petronas’ Pacific NorthWest LNG, as it was known, was a proposed $32 billion export terminal that would send LNG to Asia. The decision highlights how competitive global LNG trade has become, despite growing demand. Greenfield projects, such as Pacific Northwest LNG, face steep startup costs that become prohibitive when oil prices fall.

Although low oil prices may have been the icing on the cake, Canadian LNG projects were facing serious obstacles before oil prices plummeted. There is stiff competition from a slew of LNG projects already under construction in the U.S. and Australia, which will come online much earlier than anything from British Columbia.

…click on the above link to read the rest of the article…

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