Canada gives approval for Petronas LNG project

The Canadian government, under Prime Minister Justin Trudeau, has approved the controversial liquefied natural gas (LNG) project proposed to be built by Malaysian state oil company Petroliam Nasional Bhd (Petronas) in British Columbia. But the approval for the Pacific North West LNG project came with around 190 environmental-protection requirements attached to it.

In order to proceed with the LNG project, Petronas will have to meet environmental conditions including a cap on carbon gas emissions and a call for the hiring of an independent environmental monitor in consultation with indigenous tribes and local government.

Trudeau has pledged to reduce Canadian carbon emissions and toughen environmental standards. While the Petronas project is forecast to emit as much as the equivalent of 14% of British Columbia’s current total, Trudeau previously said that exporting LNG will provide global consumers a cleaner source of power than coal or oil.

The project is “an important opportunity to grow our economy and shows how we are rebuilding Canadians’ trust in our environmental-assessment process,” said Environment Minister Catherine McKenna, who made the announcement with Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc.

However, the approval comes at a time when a glut of new supply from LNG export projects in Australia and the US are already outpacing demand growth, weighing down global prices and causing companies to postpone future developments.

Petronas is the majority owner of the Canadian project, along with China Petrochemical Corp. (Sinopec), Japan Petroleum Exploration Co. (Japex), India Oil Corp. and Brunei National Petroleum Co.

Petronas CEO Wan Zulkiflee Wan Ariffin said the company hasn’t decided yet whether to fully invest in the plant. “We need time to look at the conditions and then we will have a review of the project,” he said. “I’ve not seen the details of the announcement yet.”

The Pacific North West LNG project was expected to ultimately produce up to 19.2 million tons a year of LNG, or what the company describes as up to one LNG tanker’s capacity each day.

British Columbia’s provincial government strongly supported the project, but local indigenous groups were divided amid concerns about its impact on salmon habitat and the environment.