Setback for Kitimat LNG as Shell postpones investment decision
Shell announces earnings down 44 per cent on low oil and gas prices
By Karin Larsen, CBC News, Feb 04, 2016
The huge LNG Canada export project proposed for Kitimat appears to have suffered a setback with Royal Dutch Shell announcing it will postpone its final investment decision.
The announcement comes on the heels of Shell releasing 2015 fourth-quarter results which show a 44 per cent slump in earnings due largely to the slump in oil prices.
“Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016,” said Shell CEO Ben van Beurden.
Shell owns a 50 per cent stake in LNG Canada. PetroChina, Korea Gas Corp. and Mitsubishi Corp, are also stakeholders in the joint venture.
LNG Canada responded to a CBC News request for interview with a statement:
“We have always stated that our Joint Venture Participants plan to make a Final Investment Decision in 2016,” wrote Andy Calitz, CEO LNG Canada. “We are pleased, given the current oil and LNG prices, and turmoil in global energy markets, that the Joint Venture Participants in LNG Canada are still working towards a Final Investment Decision for the proposed facility later this year.”
Last month LNG Canada cleared an important hurdle when it was granted the first permit to build a liquefied natural gas export facility in northern British Columbia.
The project could cost up to US$40B and would initially consist of two processing units called trains, each able to produce 6.5 million tonnes of LNG annually. The facility could be expanded to four trains in the future.