Canada approves C$36b Petronas-led LNG project

RICHMOND (British Columbia): The Canadian government has approved a proposed C$36 billion (RM112.6 billion) liquefied natural gas (LNG) project in northern British Columbia led by Malaysia’s Petroliam Nasional Bhd (Petronas).
The green light for the Pacific NorthWest LNG project in northern British Columbia comes after a three-year wait for Petronas and its partners, but analysts are sceptical about the project’s prospects given low gas prices and cost-cutting at the Malaysian oil giant.
The decision on the project was seen as a major test for Canada’s Liberals, juggling the needs of an energy industry suffering from job losses and the concerns of environmentalists, courted by Prime Minister Justin Trudeau in last year’s election campaign.
The approval came with 190 conditions that Petronas and partners in China, India, Japan and Brunei would have to meet, after a review found the project would have a significant environmental impact.
Petronas’ investment in the project would depend on LNG prices that have dropped by over a third in two years amid worries about oversupply and faltering Chinese demand.
“The economics (of the project) require much higher LNG prices than currently and than are forecast for the next few years,” said Wood Mackenzie analyst Alex Munton. “That’s what we think will cause Petronas to pause investment until it’s more confident about future gas prices.”
Other LNG projects also face delays: in July, Royal Dutch Shell and its partners pushed back a decision on building an LNG export terminal in British Columbia, and Chevron has delayed the scheduled 2017 start of its Kitimat LNG project, also in British Columbia.
The legally binding conditions Canada attached to the project include a hard cap on carbon emissions.
Environmentalists have said the facility would cause a massive increase in greenhouse gas emissions at a time when Canada looks set to badly miss its existing climate change targets.
“If this project is built as currently approved, it will be one of the single biggest sources of carbon pollution in the country,” said Merran Smith, executive director of Clean Energy Canada.
Environment Minister Catherine McKenna, who announced the project’s go-ahead on the banks of the Fraser River on Tuesday, flanked by Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc, said she was confident the project would proceed in the most sustainable manner possible. – Reuters