Petronas gives conditional approval to Canadian LNG project

[VANCOUVER] A consortium led by Petronas, Malaysia's state energy firm, said on Thursday that it will move forward with its Pacific NorthWest LNG project in British Columbia, on the condition that it is approved by Canada's environmental regulator.

The final investment decision comes as the Canadian Environmental Assessment Agency (CEAA) has again paused its review of the US$11 billion liquefied natural gas export terminal, requesting further information from the company on plans to mitigate damage to a salmon spawning habitat.

In a statement, the company said the project had satisfied all required technical and commercial components, and would move ahead subject to CEAA approval and a finalisation of the project development agreement. "Pacific NorthWest LNG is poised to make a substantial investment that will benefit Canada for generations to come,"said project president Michael Culbert in a statement.

The export terminal, located on Lelu Island near the port city of Prince Rupert, is part of a broader US$36 billion investment by Petronas and its partners in Canadian natural gas. If constructed, it will be Canada's first LNG export facility.

But the development is opposed by some aboriginal and environmental groups, who say it will harm a sensitive salmon habitat in Flora Bank, adjacent to the terminal site.

The environmental review of the project was halted for a third time this month, after the CEAA requested additional 3D modeling information related to the impact on Flora Bank.

The agency also asked for more information on the effects to traditional aboriginal fisheries and marine animals. It did not say when it expected the review to resume, creating uncertainty around when a construction decision will be made.

Petronas, formally known as Petroliam Nasional Bhd, said it will also continue to engage with aboriginals and local communities on the project development. The company has already made numerous changes to its design to mitigate the impact on the sensitive fish habitat.

The Pacific NorthWest LNG project is one of the more advanced of 19 proposed for British Columbia's coastline, as dozens of companies race to build the facilities needed to export cheap Canadian gas to energy-hungry markets in Asia.

Earlier on Thursday, Canada approved a C$1.7 billion (S$1.86 billion) pipeline that will supply gas to the Petronas-led export project.

The project is a joint venture between operator Petronas, China Petroleum and Chemical Corp (Sinopec), Japan Petroleum Exploration Co (Japex), Indian Oil Corporation Ltd and PetroleumBrunei.

REUTERS