Shell has put on hold the final investment decision (FID) for its British Columbia start-up LNG Canada, blaming the slump in oil and gas prices for weakening the project’s prospective returns.
The energy giant announced the decision today (4 February), having filed dismal full-year results, including a US$6.5 billion loss. The news comes less than a month after LNG Canada secured a facility permit for its planned terminal in Kitimat, becoming the first proposed British Columbia export project to pass that particular milestone.
Today’s news comes as a major setback for Canada’s LNG-export ambitions. Experts ranked LNG Canada among the five strongest prospects out of some 20 proposed export projects in British Columbia. Partners Shell, Mitsubishi, Kogas and PetroChina planned to export 24 million tonnes a year (mta), starting with two 6.5 mta trains and adding two more.
Kitimat-based Douglas Channel LNG may now become the first Canadian export project to come to market. The 550,000 tonne a year venture will use a floating LNG (FLNG) vessel to tap offshore gas. Belgium-based Exmar hopes to supply a FLNG vessel to the project.
Shell, which is completing its US$50 billion takeover of BG, is planning to dispose of US$10 billion worth of assets this year, having unveiled the worst annual loss in its history.
The company reported fourth-quarter 2015 equity sales of LNG at nearly 5.7 million tonnes, down 8 per cent on-year, reflecting the expiry of the Malaysia LNG Dua joint venture agreement. In 2015, total equity sales came to 22.6 million tonnes of LNG, down 6 per cent on-year.