A damning internal audit conducted by Petronas on its own operations – highlighted today by the Vancouver Sun – will likely have to be taken into account by the Canadian Environmental Assessment Agency (CEAA), says a Canadian regulator watchdog.
The Sun obtained a 732-page internal audit that Petronas conducted in 2013 of its operations.
According to the September 11 Sun story, the audit pointed to serious concerns about some of the company’s oil and gas operations in Malaysia, where the company is headquartered.
The report included photos of badly rusted valves and pipes used in the company’s operations, and warned of potentially “catastrophic” consequences if not addressed.
In response to the Sun story, Petronas released a statement in which it insists the problems have been fixed, and that the purpose of the audit was to identify those areas of its operations that need improvement.
“Audits, such as the one referred to in the article, are widely performed in the industry with only one objective – to ensure that best practices are not only maintained, but also improved upon,” said Wee Yiaw Hin, CEO of Petronas’ upstream operations.
“We acknowledged the gaps identified in the report and we have executed a comprehensive programme to resolve the issues and ensure the safety of our people, environment and our facilities.”
Brent Stafford, executive producer for the regulatory watchdog organization RegultorWatch, points out that environmental and industrial standards in Canada are more stringent than they might be in Malaysia.
But he said the Petronas audit being made public can’t help but damage the company’s profile and feed cynicism towards the company.
Petronas’ $36 billion Pacific NorthWest LNG project is currently in the CEAA environmental review process. Stafford believes the CEAA will have to include the Petronas audit as part of the review.
“If it’s presented as evidence, they’re going to have to consider it,” he said. “I would imagine an intervener is certainly going to present it. I don’t think it’s possible that a report like this would not have some impact on the assessment process – as it should.”
He added that, even though it’s unlikely the company could get away with the kind of shoddy maintenance revealed in the audit here in Canada, it could feed cynicism towards the company.
“The problem is the pessimism that goes with the realization that a company may take advantage of looser regulations in developing countries in order to save money, and take risks with the environment, and then that same company asks the public to grant them social licence here and trust them that they’ll follow stricter regulations.”
