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Petronas calls for fair relationship between LNG consumers and producers

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LNG Industry,

Speaking at the LNG 18 event in Perth, Australia, Ahmad Adly Alias, the Petronas Vice President of LNG Marketing, said that both LNG producers and consumers have a responsibility for sustaining a fair balance in the market, in order to mitigate the impact of cyclical LNG price movements on all stakeholders.

Adly said: “Currently, there is a perception that the LNG market will be oversupplied for a long time, prompting many buyers to demand better commercial terms from sellers. However, if LNG prices continue to be depressed, there might be a possibility that some producers might pull the plug on LNG projects that have not gone through with their Final Investment Decision (FID).”

Adly added that there will be tightness in the market in the future if projects are continually deferred due to the current unfavourable environment. Whilst customers are benefiting the depressed market at present, in the long run, they should allow prices to return to a more equitable level in order to support producers in bringing projects online. He said: “In the long run, the demand curve will gradually match the LNG supplies available in the market and reach some level of equilibrium.”

Adly also encouraged both producers and consumers to view the LNG business as a long-term pillar towards ensuring energy security for countries around the world that are reliant on a continued, sustainable source of cheap and clean energy. He urged all involved parties to leverage on the long-term relationship that is at the centre of the LNG business, and make sure that producers do not suffer from the low-price environment.

Adly said: “We are a long-term player in an industry with a long-term horizon. To ensure the sustainable growth of the world’s LNG market, we need to have an equitable partnership between buyers and sellers. This enables suppliers to ensure security of supply well into the future.”

“Petronas is in a unique position as a seller and buyer of LNG. With our fully integrated operations, we are able to add value to the resources and enable ourselves to be flexible in our offerings to the markets.”

Edited from press release by David Rowlands

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