PKR Reveals RM15.8 Billion of Petronas Investments are High Risk

PETALING JAYA, 16 Dec: PKR revealed that Petronas’ investments amounting to RM15.8 billion in Canada are high risk following several gas giants that have suffered losses of billions of US dollars investing in shale gas.

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PKR Strategy Director, Rafizi Ramli, said that Petronas should be careful in entering the industry, especially since big companies are suffering huge losses.

He said that the three large companies that have suffered losses are; the largest Canadian natural gas firm Encana Corporation, British multinational BG Group and Australia’s oil and gas firm, BHP.

“On the 27th of July 2012, Encana Corporation lost RM5.3 billion (1.7 Canadian Dollars) when they were forced to write down its investment in shale gas after a less than expected returns. They announced that more companies will suffer losses in future operations.

“BG Group also wrote down its US$1.3 billion (RM3.9 billion) investment in shale gas operations in the same month.

“The same happened to BHP, which lost RM7.5 billion (2.5 billion Canadian Dollars) after buying shale gas from Chesapeake Energy a year before it dropped throughout 2012. Within a year, BHP’s investments returned only half of its original cost,” he said in a press statement here at the PKR headquarters.

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Rafizi said that the investment made brings up questions because Petronas excitedly took part in the investment when the losses of the companies were public knowledge.

In relation to that, he said, Petronas and the Prime Minister, Datuk Seri Najib Tun Razak, needs to answer to the people the real situation of the investment.

“Would Petronas have to write down its investments like the other companies that suffered losses because the price of natural gas in North America remains low at USD3.37 per MMBTU and has not increased compared to the previous price of between USD7 to USD12 from 2008 to 2010,” he said.

Prior to this, Petronas signed its biggest investment agreement when it finalised the purchase of Progress Energy Resources Corporation, amounting to RM15.8 billion.

The transaction was finalised at the end of 2012, giving it shale gas properties in northeastern British Columbia.

Rafizi said due to the investment, a stronger monitoring body is needed to watch over large investments by Petronas and not to be merely submitted to the Prime Minister.

“I will continue to present facts and analysis which will bring about discrepancies about this transaction every day of this week so that Najib responds accordingly,” he said.

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