MALAYSIAN - CANADIAN LNG: $27 BLN
According to FT, Petronas, Malaysia's state-owned oil and gas group, has gained approval from the Canadian government for a controversial $27bn liquefied natural gas project — but said it would have to consider the environmental conditions attached before deciding to proceed.
In its first big energy policy decision, prime minister Justin Trudeau's government gave the go-ahead for the Petronas-led project in the country's Pacific Northwest, which will bring gas from fields mainly in Alberta via a 900km pipeline to a liquefaction facility in British Columbia.
However, the government added more than 190 conditions to its approval including measures to mitigate the impact on fish and marine mammals.
As a result, Petronas — which previously said it planned to cut spending by up to $11.4bn over the next four years — has warned it will need time to review the project.
In a statement on Wednesday, the Malaysian group said: "Petronas and its partners will study the conditions imposed by the Canadian authorities and conduct a total review of the proposed project prior to deciding on the next steps forward."
Its project has been approved at a time when LNG, along with the rest of the global commodities market, is in the doldrums. LNG production capacity worldwide is increasing as large gas importers such as Japan face weak growth.
"Petronas and its partners who have made so much investment already will be left with considerable egg on their face if they don't develop this project," argued Noel Tomnay, head of global gas and LNG at Wood Mackenzie. "But Petronas doesn't need the project to be completed quickly," he added. "The global LNG market does not need Pacific Northwest LNG quickly."
With up to $27bn being invested by various parties, the project is one of Canada's biggest in natural resource development. Government estimates suggest it will create 4,500 jobs.
However, the plans have been opposed by some environmentalists and aboriginal communities who fear its impact on a salmon breeding habitat.
Among the conditions imposed by Canada, in an announcement late on Tuesday, is a cap on the annual greenhouse gas emissions from the project.
Mr Tomnay said: "Petronas are particularly troubled because, although the oil price has gone down, the calls on Petronas's contribution to the Malaysian government have not significantly reduced. So their ability to expend capital has been severely restricted."
In the first half of this year, Petronas group revenue fell 23 per cent year on year, down from Rm127bn ($31bn) to about Rm98bn, depressing net profit by more than 70 per cent.
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