LNG Bluff 3: PETRONAS

The LNG market seems to be down for the long duration and any further PETRONAS investment in the LELU island project will not pay dividends for a long time. Also, reports that Malaysia is in financial difficulties, amongst a wide range of troubles, seem to be evidenced  the government’s recent introduction of the GST and  by the unpopular gas subsidy cuts. PETRONAS  which is a crown corporation, has historically been  Malaysia’s largest source of revenue covering, according to Reuters, as much as 45 percent of the government’s budget. In spite of the subsidy cuts and tax increases Reuters also reports that the 2017 budget deficit is expected to be 40.3 billion ringgit or 3 percent of GDP. Is PETRONAS really looking to pursue the Lelu island project, given the resistance and the court challenges and the expected uncertainty,  delays and costs? Or are they merely looking serious while, as has been rumored, they search for a a buyer for their majority holdings. There is also collateral benefit in this positive stance, even if they decide negatively, as their associates, the provincial Liberals, are running  up to elections in May.

http://www.reuters.com/article/us-malaysia-petronas-idUSBRE86105420120702

http://www.reuters.com/article/malaysia-budget-highlights-idUSL4N1CQ3EY

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