The world's first floating liquefied natural gas (LNG) project, built by Petronas, is expected to supply its first cargoes in the first quarter of 2016, senior officials from the Malaysian state-oil firm said on Tuesday.
The 365-metre (1,200 ft) long Petronas Floating LNG 1 (PFLNG1), with a capacity of 1.2 million tons per annum, would be completed by March next year, the firm's Vice President and Venture Director LNG Projects (Domestic) Abdullah Karim was quoted by Reuters as saying.
"We expect the first cargo of LNG to be available in the first quarter of 2016," Abdullah said, adding that the gas supplies will likely be used for domestic consumption.
Abdullah did not reveal the total investment value of the facility nor the LNG price assumption used during the final investment decision (FID) in March 2012, but said the project was currently still profitable.
"We are still optimistic about this. Our projection number is not for oil prices at $110. Even today with prices at $62 or so, it's still viable for Petronas," he said. Brent crude oil steadied around $63 a barrel on Tuesday, not far below the 2015 high hit on April 16, while US crude was trading at $55.93. Oil has climbed around 15 percent this month, fuelled by concerns over the conflict in Yemen, southern neighbor to oil-rich Saudi Arabia.
"At the current oil prices, it is challenging. But if oil prices rise to $70 a barrel, we can get double-digit internal rate of return," said the Senior Vice President of Petronas' Technology and Engineering unit Colin Wong. Industry players have raised questions over whether it is more cost-efficient to build land-based or floating LNG facilities.
Royal Dutch Shell is building its own floating facility in Australia, named Prelude. The project is anticipated to be the world's biggest maritime vessel and is set to start up in 2017.
Abdullah said PFLNG1, with an expected lifespan of between 20-25 years, would save Petronas around $500 million.
Petronas is due to make a FID on an $11 billion LNG export terminal in British Columbia by June, after postponing the decision late last year. In March, unlisted Petronas, Malaysia's only Fortune 500 company, reported a $2 billion fourth-quarter loss and announced plans to cut in spending over the next two years, hit by a slump in global oil prices.
