Canada ap­proves C$36b Petronas-led LNG project

The Sun (Malaysia) - - MEDIA & MARKETING -

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 three­year 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

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