Malaysia’s state-owned Petronas, which leads a consortium that wants to build a multi-billion dollar LNG (Liquefied Natural Gas) terminal on B.C.’s coast, has fired a warning shot over the delays surrounding the controversial project.

As the company grapples with a falling ringgit fuelled by a domestic corruption scandal involving Malaysian Prime Minister Najib Razak and low crude oil prices, the company’s chief executive officer Wan Zulkiflee Wan Ariffin lamented in a recent interview with Malaysianinsider.com about the delays.

Petronas, leader of the Pacific NorthWest LNG consortium, is still awaiting environmental approval from regulators to start construction on project, which has faced resistance from groups, including indigenous organisations.

The C$36 billion (RM159 billion) proposal was “shovel-ready” and only awaits the permit, Michael Culbert, chief executive officer of the venture, said in October.

The company would review its decision within this quarter on whether to proceed because the project “can’t be held in abeyance indefinitely”, said Wan Zulkiflee.

“The window is closing fast,” he told the Malaysian Insider.

However, Wan Zulkiflee was confident that Petronas’s “good” cash build-up would help it through difficult time. It has a capital expenditure plan of as much as RM350 billion over the next five years.

Industry experts said the deepening slump is adding fresh pain for Petronas, which is committed to long-term project investments for future growth and meeting dividend obligations to the government.

The drop in oil has in part led to international investors souring on Malaysia, with the ringgit slumping to a 17-year low in 2015.

Moody Investors Service lowered its credit-rating outlook for Malaysia recently

While it has sufficient cash to go through the difficult period, Petronas also has “a lot of headroom” if it needs to tap the dollar market, Wan Zulkiflee said.

The company has net cash of about RM88 billion at the moment according to Bloomberg.

Industry newsletter oilweek.com said there are currently 20 projects to export liquefied natural gas (LNG) from Canada’s west coast, and while just a couple of years ago it was believed five to seven of them would go forward, the collapse in global crude prices and the accompanying weakness in Asian import LNG prices has cut that number at least in half.

In a speech delivered in Halifax last summer at the Energy and Mines Ministers' Conference, the International Energy Agency’s executive director, Maria van der Hoeven, warned of the “deteriorated” prospects for Canadian LNG projects and the likelihood of more deferrals by the front-running major project proponents.

“There is today an abundance of gas globally, including LNG supplies,” she said. “While it seemed for a while that markets—Asia in particular—were ready to buy gas at almost any price, at least in the short term, this no longer seems to be the reality.”

“Proposed LNG projects require timely political and regulatory decisions because global LNG competition is fierce and involves many well-established international suppliers,” Tim McMillan, the Canadian Association of Petroleum Producers (CAPP)

president and chief executive officer said in the summer. “The window of opportunity for Canada’s LNG market will not stay open forever.”

It is not all bad news on the Petronas front for the government of BC as it continues with its plans to make LNG for export a cornerstone of its economic strategy.

Last week, federal scientists said the project poses a low risk to the environment, a crucial ruling that sides with Pacific NorthWest LNG’s contention that its project won’t ruin an ecologically sensitive site.

The consortium led by Malaysia’s state-owned Petronas wants to build an $11.4-billion terminal on Lelu Island, which is located next to Flora Bank – a sandy area with eelgrass that nurtures juvenile salmon, said the Globe and Mail.

“The effects of the marine structure on fish and fish habitat have been categorized as having a low potential of resulting in significant adverse effects,” Fisheries and Oceans Canada said in a letter last week to the Canadian Environmental Assessment Agency (CEAA).

The agency is expected to render a final decision by the spring on the controversial project. Its review started in April, 2013, but encountered a series of delays as the regulator asked the consortium for more information, the paper said.

The conditional support from federal scientists bodes well for Pacific NorthWest, which has been facing opposition from environmentalists and the Lax Kw’alaams First Nation, reported the Globe and Mail.

The Skeena Watershed Conservation Coalition and other environmental groups have also raised concerns about the risk to fish habitat on Flora Bank.

Greg Horne, energy co-ordinator with Skeena Watershed, said Sunday that the federal findings “ignore the peer-reviewed published science conducted by the Lax Kw’alaams science team.”

The analysis by federal scientists unfairly favours Pacific NorthWest and is disrespectful to the Lax Kw’alaams, said Mr. Horne, who expects a court challenge if the project is approved by the CEAA.

The Tsimshian Environmental Stewardship Authority, formed in July by the Metlakatla First Nation and four other aboriginal groups, believes there could be an acceptable way to export LNG from Lelu Island.

But members of the Lax Kw’alaams overwhelmingly turned down Pacific NorthWest’s attempts last year to secure aboriginal consent for the project. Some members who are opposed to the venture set up a protest camp in August on Lelu Island.

Pacific NorthWest’s proposal is considered by industry analysts to be the front-runner among 20 plans to export LNG from British Columbia.

The project at a glance

Pacific NorthWest LNG is majority-owned by PETRONAS. JAPEX, Sinopec/Huadian, Indian Oil and PetroleumBRUNEI are also partners in Pacific NorthWest LNG and its associated natural gas supply.

Pacific NorthWest LNG is planning to build a world-scale LNG export facility on Lelu Island in the District of Port Edward, British Columbia. The proposed facility will comprise an initial development of two LNG trains of approximately 6 million tonnes per annum (MTPA) each, and a subsequent development of a third train of approximately 6 MTPA. The proposed facility would liquefy and export natural gas produced by Progress Energy Canada in northeastern British Columbia.

The export of liquefied natural gas (LNG) is a new industry in B.C. with significant economic and social potential. Pacific NorthWest LNG says it will create new economic and social benefits for the local community, BC and Canada in an environmentally safe and sustainable manner:

Up to 330 direct operational long-term jobs

Approximately 300 local spin-off jobs

Up to 4,500 jobs during peak construction.