Petronas said to test bank interest for $12 billion LNG finance
By Bloomberg
Petroliam Nasional Bhd. is testing lender interest for as much as $12 billion of financing for a Canadian liquefied natural gas project, according to people familiar with the matter.
Malaysia's state-owned oil company, known as Petronas, and four energy partners from China, Japan, India and Brunei, have asked bankers to indicate their willingness by the end of this week to help fund Pacific NorthWest LNG Ltd.'s proposed project in British Columbia, said the people, who asked not to be named because the process is private. The request doesn't mean that the Petronas-led group has decided to proceed with the development, said one of the people.
"This represents a normal course of action as Pacific NorthWest LNG prepares for a final investment decision by the end of 2014," Spencer Sproule, a spokesman for Pacific NorthWest LNG, said in an e-mailed response to questions. Anita Azrina, acting senior general manager of group strategic communications at Kuala Lumpur-based Petronas, didn't immediately reply to an e-mail or voicemail seeking comment.
The proposal landed on bankers' desks as British Columbia's government prepares to tax profits from LNG terminals following months of talks with supporters of the Pacific NorthWest project such as Petronas and Royal Dutch Shell Plc. Petronas warned two weeks ago it may delay the development by as many as 15 years unless the provincial and federal governments commit to lower taxes before the end of October.
LNG Profits
"The additional tax and high-cost environment will negatively impact the project's economic viability and competitiveness," Petronas Chief Executive Officer Shamsul Azhar Abbas said in an Oct. 6 statement. The project is scheduled to start operating in 2019.
British Columbia yesterday unveiled a system to tax LNG terminal operators on emissions of carbon and other pollutants blamed for global warming. The government of Premier Christy Clark is expected to provide more details today on the tax on LNG profits.
In February the government proposed a tax of 1.5 percent on profits from LNG terminals until project developers have recovered their costs. The rate would rise to as much as 7 percent after costs have been recovered.