Canada Lost the Opportunity to Supply LNG to the Global Consumers

Aug 14th, 2017

The decision of Malaysia not to reimplement the LNG project in British Columbia will take a toll on the Canadian program on the LPG industry development. Malaysian state energy company Petronas was going to invest about 29 billion dollars in this project but has refused this idea because of the low price of LNG at the world market.

Early on, Petronas had to wait for the Canadian government decision on the project of. After three years, in 2016 the project was approved by the Canadian Prime Minister Justin Trudeau. In addition, environmentalists harshly criticized the project and prevented the construction of the plant. They feared that carbon dioxide emissions will disrupt the ecological environment, and the terminal will harm the populations of wild salmon in the surrounding rivers.

Petronas planned to build a plant with the capacity of 19 million LNG tons per year intending to deliver LNG mainly to the Asian markets. The company has invested about one-third of the total investment in the project in order to start the plant in 2019.   The problem is serious enough as the Canadian LNG producers have lost the opportunity to enter the Asian markets. They have access to the markets in North America only, which are already saturated. The export of LNG to the Asian consumers would greatly facilitate the task of marketing to Canadian businesses.

Along with the environmental and bureaucratic delays, this LNG project met with the strong opposition of the Canadian Indians whose representatives filed a lawsuit in Vancouver Federal Court to challenge the decision of the Canadian government. The terminal was planned to build near the town of Prince Rupert, the island of Lela, but environmentalists and local residents demanded to ban any industrial construction in this area.

According to plaintiffs, Lela, the largest island of Canada in the estuary of the Fraser River, is a critical habitat for wild salmon, and a new LNG plant may cause irreparable harm to salmon populations, destroying habitats of the fish area of about 35 thousand sq. m.

The plaintiffs claim that the environmental assessment for the Malaysian project was carried out with violations and does not account for the adverse effects of the construction.

Thus, the environmental objections and the buyer’s price of LNG have forced the Malaysian company to refuse to build LNG terminal in Canada.