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The five companies behind the US$31 billion (C$40 billion) LNG Canada project have made a final investment decision on the project, they said in a press release, ending months of uncertainty and worry that the large-scale project could become the second failed LNG initiative in British Columbia.
LNG Canada will be the first liquefied natural gas production and export facility in the country, and according to federal PM Justin Trudeau, it “is the single largest private sector investment project in Canadian history.”
LNG Canada is a project of Shell, with a 40-percent stake, Malaysia’s Petronas with 25 percent, PetroChina with 15 percent, Mitsubishi with 15 percent, and South Korea’s Kogas with 5 percent.
The facility, which is expected to become operational before 2025, will initially have two liquefaction trains, each with a capacity of 6.5 million tons of LNG with the prospect of adding another two trains at a later stage, bringing the total capacity of the facility in Kitimat, in northern British Columbia, to as much as 26 million tons annually.
The final investment decision on the project was supposed to be made in 2016, but it was delayed for two years due to unappealing LNG prices amid growing capacity coming on stream, notably in Australia, but also in Russia.
What’s more, there were doubts until the last moment as the local stakeholders still remembered the US$27-billion Pacific NorthWest LNG project, which Malaysia’s Petronas quit last year, again because of the low LNG price environment. Yet the Malaysian company this year joined the LNG Canada consortium—with a hefty stake no less—rekindling optimism about the project that has now been proven wise.
Meanwhile, B.C. politicians are quarreling rather than rejoicing: CBC reports the parliamentary parties are fighting about who should take the credit for the favorable investment decision on the project. The current government in Victoria only came into power last year, and the Liberals who were in power before also have a claim in the success of the project.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.