OTTAWA/VANCOUVER/KUALA LUMPUR – A major liquefied gas export project in Canada encountered another delay on Saturday once the federal environmental assessment agency was granted an extra three months to complete an effect study.
Ottawa did though commit to announcing your final decision on the project this season, which may end a long-running saga for Malaysia’s state-owned oil giant Petronas.
The firm and its partners have been waiting nearly three years for any permit to construct the Pacific NorthWest LNG facility in northern Bc, on the Pacific coast.
News of the latest delay broke on Saturday, when federal Environment Minister Catherine McKenna decided to the Canadian Environmental Assessment Agency’s request the extra 3 months.
The CEAA – that’s because of deliver its report to McKenna by March 22 – said it needed more data from the project’s backers after they handed over a series of documents and observations on March 4.
A spokeswoman for McKenna said the federal cabinet would announce a decision three months following the backers had handed over the requested more information.
The ambitious plan to build Canada’s first LNG export terminal faced challenges from the beginning, including controversy over its chosen site, which local aboriginal and environment groups said would destroy a vital salmon habitat.
It is also the first major project to have an environmental assessment completed under new rules which include the outcome of upstream production on project emissions.
A spokesman for North american didn’t immediately respond to a request for comment.
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Petronas, battling a profit-sapping slump in prices that could produce heavy losses, can ill manage to splurge on future supply.
But neither will it afford an extended and inconclusive process with authorities in Canada, where the project is viewed as a test of Prime Minister Justin Trudeau’s green credentials.
Trudeau’s Liberals found power last November promising to do a far better job of protecting environmental surroundings compared to previous Conservative government.
But the Liberals, who say Canada must cut emissions of greenhouse gases, are also pressurized to proceed approvals of projects within the energy sector, that is losing jobs because of the slump in oil and gas prices.
“The company has requested more information in the proponent in order to see whether the project will probably cause significant adverse environmental effects,” it said within the statement.
The request additional time to complete the outcome study raises the prospect of more conditions on construction. This could simply make the work economically unviable, analysts say, leaving Petronas to write off billions already invested.
For Petronas, and Malaysia, the circumstances have changed dramatically because it launched the project, long considered a front-runner among dozens proposed for British Columbia.
Gas costs are currently a quarter of 2014’s peak. Recently, Petronas cut jobs and announced some US$12 billion in spending cuts within the next four years – exactly the same sum analysts estimate it’s sunk into the Canadian project.
And Malaysia’s economy too is cooling, dampened by China and a domestic financial scandal. Petronas is one of the country’s biggest employers and makes up about nearly a third from the government’s oil and gas-related revenue.
The stakes will also be high for Canada, which is seeking to jump start the local LNG industry, said Wood Mackenzie analyst Chong Zhi Xin, speaking before Saturday’s announcement.
But those ambitions be Trudeau promises to transform Canada’s environmental image. If built, environmental campaigners the Petronas project would tarnish that.
? Thomson Reuters 2016
