Shell, partners set to open terminal, insiders say

Royal Dutch Shell and its partners are set to announce a decision on their $40 billion liquefied natural gas terminal in Kitimat, B.C. as early as next week, amid signs the companies are poised to approve it, according to people familiar with the plans. Preparations for an Oct. 5 announcement followed by an LNG Canada event and fireworks at the local golf club the next day are underway in Kitimat, the site of the proposed project, said people with direct knowledge of the activities, who asked not to be identified. The situation is fluid and timing could change, the people said.

LNG Canada — backed by Shell, Mitsubishi Corp., Malaysia’s Petroliam Nasional Bhd., PetroChina Co. and Korea Gas Corp. — would be Canada’s largestever infrastructure project. With the capacity to eventually export as much as 26 millions tonnes per year, primarily to Asia, it would also be the largest new LNG terminal to be sanctioned in years.

“We are currently reviewing the decision support package that LNG Canada submitted to joint venture participants,” Shell Canada said in emailed response to questions. Shell declined to comment on the announcement date and whether a final decision has been made. The group has long said an investment decision will be made this year. British Columbia has set a Nov. 30 deadline for a final decision if the project is to claim as much as $6 billion in tax breaks and savings. The project may also get a boost from the Canadian government in the form of tariff relief, said a published report Wednesday. The government has agreed to waive import duties on steel needed for the terminal, saving the companies about $1 billion, the Globe and Mail said, citing people familiar with the plan. The LNG group had sought relief from the duties, arguing that the steel for the massive terminal couldn’t be sourced in Canada.

“We are hopeful that Shell will make a positive investment decision which will lead to the creation of thousands of jobs,” said PierreOlivier Herbert, spokesman for Finance Minister Bill Morneau.

“There is due process in place for the remission of surtaxes in the event that there is no domestic supplier, and that process must be followed.”

The LNG decision was put off twice in 2016 amid a global supply glut, but the outlook for LNG has brightened. LNG imports will set a new record this year of 308 million tonnes per year, up 8.5 per cent since 2017, Bloomberg New Energy Finance forecast on Sept. 12. Half of that growth will come from China and the remainder largely from Japan, South Korea and India, the London-based researcher said.

“The overall conditions for LNG Canada to go ahead in 2018 are quite good,” Andy Calitz, chief executive officer of the project, said in an interview in Vancouver this month. “That is, and feels, so very different to 2016 when the project was delayed.”