Malaysia’s Petronas halts $29 billion western Canadian LNG project

CALGARY, Alberta (Reuters) by Nia Williams and Ethan Lou – Malaysian state-owned energy company Petronas [PETR.UL] will not proceed with a proposed C$36 billion ($28.8 billion) liquefied natural gas (LNG) project in western Canada because of weak global prices, the company said on Tuesday. The cancellation is a heavy blow to Canada’s ambitions to become a global LNG player and to the regional economy, although many industry observers said it was not unexpected given years of delay to the huge project near Prince Rupert in the north of the province. It is also the latest setback for the country’s energy industry, already bruised by international oil firms selling off around $23 billion in Canadian energy assets this year alone. Pacific NorthWest LNG was meant to produce 12 megatonnes per year and spur further development of British Columbia’s Montney natural gas play in the northeast of the province. Without demand from an LNG facility, low gas prices in the region are expected to persist, analysts said. “The demise of the LNG industry in Western Canada means that Western Canadian gas will largely remain captive to the oversupplied North American market,” BMO Capital Markets analyst Randy Ollenberger said in a note to clients.

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