Shell says still weighing decision on Canadian LNG project
VANCOUVER: Royal Dutch Shell Plc said it hasn’t written off its Canadian liquefied natural gas (LNG) project in Kitimat, British Columbia, yet as a global supply glut killed off a competing project earlier this week.
LNG Canada, backed by Mitsubishi Corp, PetroChina Co and Korea Gas Corp, was still weighing an investment decision that was expected by early 2019, said Shell chief executive officer Ben Van Beurden on Thursday.
“We need to get the timing properly right — we think we can,” he said.
“If we look at an investment decision in the next 18 months or so, this is going to be a project that could start producing right at the moment when the spot market, the short-term market is getting tight again.”
The comments follow the cancellation of a US$27 billion (RM115.8 billion) LNG project in the same region on the northern British Columbia coast by Petroliam Nasional Bhd this week — the latest casualty in a growing list of projects quashed in recent months.
Plummeting prices have thrown the economics of export terminals from Russia to Mozambique into question as increasing volumes of gas from Australia and America’s shale formations hit the water, inundating the market with so much supply that analysts say demand may not catch up until the next decade.
Shell and its partners had in July last year delayed for the second time a decision on their LNG Canada project, which aims to export fuel to Asian markets, citing global industry challenges and capital constraints.
Van Beurden, who said he’d once considered the project the company’s best in Canada, added that Shell was trying to get costs down to a “break-even price that is very resilient — this needs to be a project that can survive also under downcycles”.
The concept had many fundamental advantages, including a feed gas position that was more stranded than anywhere else in North America, as well as proximity to premium markets, he said.
Still, Shell had some concerns about potential “escalation cycles” in the Canadian industry, he added. Bloomberg