“In talking with a lot of people that are close to many of the consortia, the different projects, there was a collective picture that was emerging that there was a lot of work to be done for sufficient certainty above a threshold of comfort to be attained,” Tertzakian said.
“There’s a lot of work to be done in terms of getting approvals and feeling certain about things like taxes [from all levels of government].”
On Wednesday, PETRONAS and its partners said an FID would be deferred “pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of the project and competition from other LNG producing countries.”
Tertzakian wasn’t surprised.
“The whole thing is being deferred until a lot more certainty can be demonstrated on many fronts. I think it’s going to be quite awhile before all these things come together and now we have the additional uncertainty of price — whether the arbitrage is wide enough,” he said.
“There seems to be a broad lack of multi-stakeholder collaboration, which leads to the consortia members not having the comfort level of certainty on all the different boxes they have to tick before they would make a multi-tens-of-billions of dollars decision.”
As a result, Tertzakian believes more FID deferrals from other large-scale LNG project proponents will also be announced.
“I think you’re going to hear of more deferrals. I know privately that there’s another decision tomorrow by one of the big consortiums and I don’t know if they’re going to make their decision public or not, but we shall see,” he said.
“I think that at a minimum you’re going to hear of deferrals. I mean no one is going to say, ‘I’m out of here for good,’ but one can certainly get the sense that the consortia with the real global muscle like the PETRONAS’ of the world, and others, are going to probably defer their decisions until all the issues are resolved,” Tertzakian added.