Malaysian oil company Petronas has decided with its partners to scrap the proposed C$36 billion ($29 billion) Pacific NorthWest LNG megaproject at Port Edward in British Columbia, Canada.
Pacific NorthWest LNG received approval from the Canadian government last year, but Petronas delayed its final investment decision on what would have been its biggest foreign investment. In the end Petronas felt that the economics of building the LNG project was not favourable.
“We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision," said Petronas executive vice president & chief executive officer Upstream, Anuar Taib.
The C$36 billion price tag included around C$11 billion for the export terminal, C$6.5 billion in pipelines, the C$5.5 billion Petronas paid for Progress Energy and its natural gas assets and around C$2 billion a year expected to be spent on producing natural gas.
Pacific NorthWest LNG confirmed that it will complete its outstanding business commitments by the end of September. Its offices in Prince Rupert and Port Edward are scheduled to be closed effective 25 August 2017.
TransCanada Corp, which was contracted to build the pipeline connecting gas wells to the LNG terminal, said it will be reimbursed for costs associated with the project. It had spent C$500 million as of April, spokesman Shawn Howard said.
Anuar added: “We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward."