PETRONAS Urges LNG Industry Stakeholders to Curb Vicious Cycle

PETRONAS has urged all stakeholders in the liquefied natural gas (LNG) industry to take a bold step to help curb the vicious cycle of LNG price volatility, while enhancing mutually-beneficial partnership among producers, buyers, industry contractors and governments to spur investments.

Speaking to the audience of the plenary session on ‘Investing for Growth’ at the LNG 18 Conference in Perth, Australia, PETRONAS’ President and Group CEO Datuk Wan Zulkiflee Wan Ariffin said the current state of the LNG industry, with lower prices and declining investments, was rooted in the collective actions of the various stakeholders.

Nevertheless, he remained bullish on the prospects of the industry, which is expected to grow 40 per cent by 2040, according to International Energy Agency (IEA).

“Collectively, we must take a bold step – we either continue to feed the vicious cycle, or tame it to serve our purpose. This is where all key stakeholders must play their part to create a more equitable LNG market, capable of supporting future investments for uninterrupted and affordable energy supplies to fuel the world’s economies,” he said.

“For producers like PETRONAS, I believe it is about taking a long-term view and continuing to invest in hard and soft infrastructure through the cycles. We’re not only investing in the upstream development projects, plants and LNG vessels but also in developing the capability of the people operating them -- talents throughout the whole value chain from geologists, to plant technicians, right up to the mariners, LNG marketers and traders,” he said.

Technology, he said, was a key investment area for PETRONAS as reflected in the development of the PETRONAS Floating LNG Satu (PFLNG Satu) project, which is the first facility of its kind in the world. Another example was a pioneering technology to re-liquefy the boil-off-gas from LNG tanks and tankers during loading at the PETRONAS LNG Complex in Bintulu, Sarawak, Malaysia.

Wan Zulkiflee said that while PETRONAS remained committed towards responding to customer needs with innovative commercial solutions, he urged buyers to understand that producers needed fair returns to maintain their LNG facilities and continue to reinvest in future supplies.

“I believe the conversation should now shift from just talking about the best price producers could offer to about the best value proposition and overall package they bring to the table in terms of supply security and flexibility of terms,” he said.

Wan Zulkiflee also encouraged contractors and vendors to aggressively invest in R&D and offer game-changing technology to reduce costs, and execute innovative project management schemes in collaboration with project developers to improve the delivery of LNG projects.

Governments, he added, should introduce firm policies to support LNG use as an alternative to other fossil fuels and support investment in new infrastructure and resources, backed with the political will to help mitigate the social cost linked to emissions, such as chronic pollution and the high cost of public healthcare.

Issued by
Media Relations
Group Strategic Communications
PETRONAS