Canada to Make Announcement Tuesday on Petronas LNG Project

(Bloomberg) -- Three Canadian ministers will make an announcement Tuesday on Petroliam Nasional Bhd’s C$36 billion ($27 billion) liquefied natural gas project, with stakeholders saying they expect it to be approved.

Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc are due to deliver the decision at 5:15 p.m. local time Tuesday in the Pacific coast province of British Columbia, according to a statement. The ministers’ planned announcement was earlier reported by Bloomberg News and comes after a cabinet meeting in Ottawa Tuesday morning where the LNG proposal was discussed.

Pacific NorthWest includes a liquefied natural gas facility on Lelu Island near Prince Rupert and a related gas pipeline and upstream components. It was strongly supported by British Columbia’s provincial government, but local indigenous groups were divided amid concerns about its impact on salmon habitat. The proposal will be Prime Minister Justin Trudeau’s first decision on a major energy project after a pro-environment campaign swept him to power last year.

The government advisory didn’t specify whether the project would be approved or rejected, or what conditions may be imposed. Spokespeople for McKenna, Carr and LeBlanc declined comment Tuesday.

‘Homeless’ Production

Developers have shelved multibillion-dollar LNG export projects from Australia to the U.S. amid weakening demand in Asia and Europe. Shipping consultants Poten & Partners forecast in March that at least a quarter of global LNG production would be “homeless” by 2021 as supplies surge from countries including the U.S. and Australia.

If approved, Petronas would still have final say on whether the project proceeds. No major natural-gas projects have gone ahead in British Columbia amid regulatory delays and low prices. In July, Royal Dutch Shell Plc and its partners delayed a final decision on their C$40 billion LNG Canada project. Chevron Corp.-led Kitimat LNG has slowed spending on another project nearby.

One indigenous leader, who was supposed to meet with LeBlanc in Ottawa regarding the project, said his meeting was canceled Tuesday because of the trip.

Adamant Opposition

“We believe they’ll go to the next step and they’ll approve it,” John Ridsdale, a hereditary leader with the Wet’suwet’en known as Chief Na’Moks, said by phone. His community is inland of the proposed site and he opposes its development. “We will state our adamant opposition to this. The next step for us is litigation.”

Donald Wesley, a hereditary chief of the Gitwilgyoots tribe in the region, said he was told the three ministers were traveling to British Columbia for an announcement. Glen Williams, president of Gitanyow First Nation, said a meeting on the project in Ottawa Tuesday was canceled with indigenous leaders because the ministers “needed to catch a flight to B.C.”

Nathan Cullen, an opposition lawmaker for the New Democratic Party whose district includes the development site, said he has been told the project will be approved with conditions after markets close Tuesday.

McKenna declined to answer questions about the project when she left the cabinet meeting shortly after noon in Ottawa. Trudeau spokesman Cameron Ahmad also declined to comment.

Pacific NorthWest’s emissions presents a political problem for Trudeau, who campaigned on lowering Canada’s carbon output and raising environmental standards while his government faces sluggish economic growth. Bank of Canada Governor Stephen Poloz said Monday the country’s economy will take three to five years to recover from the slump.

More than 30 liquefied natural gas projects have been proposed along the coasts of North America to export gas as shale drillers pull more out of the ground than domestic markets can absorb. These terminals face headwinds as the world is dealing with its own glut of LNG.

--With assistance from Lynn Doan To contact the reporters on this story: Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.net, Josh Wingrove in Ottawa at jwingrove4@bloomberg.net. To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Chris Fournier, Stephen Wicary

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