KINIBIZ Tiger has always viewed Petronas’ very expensive venture into shale gas in British Columbia as highly risky and ill-considered. First it paid a massive US$5 billion (RM16 billion) in 2012 to buy Progress Energy Resources which owned the gas reserves.

That’s just the start. The development of these reserves and the eventual sales of gas to Asian nations would involve substantial further investments, with one report, quoting no less than the prime minister, putting this figure at RM110 billion, now closer to RM120 billion, over a period of 30 years.

The first stage of this massive investment is building a liquefied natural gas (LNG) terminal and associated facilities for US$11 billion (RM38 billion), which is already more than twice the original investment in Progress Energy!

Finally, it’s clear. After a number of back and forths, Petronas has now delayed giving the go ahead for this particular project, citing high costs and other outstanding issues. It was said to be reviewing the impact of declining oil prices on the economic viability of the remote development.

“Costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive final investment decision (FID) can be undertaken,” the company said in a statement, Reuters reported.

Petronas said despite the delay, it is working with regulators on the necessary permission and will continue to invest in natural gas development in British Columbia. Really, but how long will it take before it continues with its investments?

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This article was written by P Gunasegaram.