Petronas gassy missteps means it is time to engage with social media.

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In recent years, Petronas made several multibillion dollar gas investments, which currently are underwater.

This included the purchase of the equity in Pacific Northwest LNG for $C5.5 billion, investment in a Floating LNG platform, called FLNG 1, estimated by the Rembau Times at US $4.5 billion and purchase of 27.5% equity interest in Gladstone LNG for US$2.0 billion. For the Gladstone project, the  the total investment includes a further US $5 billion, as part of Petronas 27.5% interest to develop the project, making the total investment at a whopping US $7 billion.

As it stands, the total investment, without taking into consideration of the off-balance sheet liability due to the off-take agreement with Santos, those four investments have cost about $18 billion US. Interestingly, Santos itself has taken an A$1.5 billion against its own 30% investment in GLNG in the 2nd Quarter of 2016.

But this is not the worst.

The fear is that the price Petronas pays for the offtake of LNG from the Gladstone project, which averaged at US $5.70 per MMBtu for the first half of 2016, is greater than the price Petronas can receive by selling LNG on the international market, which was US $4.9 per MMBtu in Aug ‘16.

Petronas Quarterly profits are shrinking fast
Petronas Quarterly profits are shrinking fast

The fear is that this shortfall in terms of price paid and price received will be borne by the Malaysian consumer, regardless of race, religion or political affiliation.

As we have revealed earlier, the public is currently paying much more for gas, at US$6.40 per MMBtu, much more than the cost in US , which is less than $3 and in Japan, which is about US$4.90.

This makes it incredibly unfair to consumers, and the question that is asked is whether the public is being used to subsidize the extra offtake from Gladstone?

In the case of the losses sustained, the Rembau Times urges Petronas to write down the investment in Petronas Northwest LNG to ZERO. The project is too complex, the environment risk too high, the argument that propane will be a cash cow, debunked, and the hope that LNG prices are going to suddenly take off, delusional at best.

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Gas prices have collapsed as supply glut and re-starting of nuclear production in Japan crimps demand

In the case of Gladstone, the Rembau Times demands Petronas seek a renegotiation on the purchase price, similar to renegotiation that took place late last year between RasGas, the Qatari National Gas Company and PetroNet, India’s largest LNG importer.

It will not be fair if Petronas workers and the public have to pay for these investment missteps.

Petronas can no longer  ignore engaging with the social media. The decisions made by Petronas can have a massive political effect and Petronas can no longer assume that the social media is unaware or un-clued on their business.

A full frank discussion, involving senior members of management and senior social media practitioners must take place as soon as possible in order to get a full understanding of the current picture and prevent other parties from capitalising on these issues.

Matters involving Petronas Advertising & Promotion spending should also be tabled to ensure that more spending can be diverted through the social media channels, which not only have a cost savings but offer better value for money, as opposed to the current policy of “prospering the Opposition media”.

Through this smart partnership, it is believed that Petronas can navigate the current stormy weather and not end up as an election or political issue closer on to General Election.

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