There are new indicators of uncertainty for British Columbia’s liquified natural gas business this week, as one of many province’s marquee tasks faces one other blow.
The second of two key traders within the proposed Kitimat LNG improvement, Australia-based Woodside Petroleum Ltd., introduced Wednesday it plans to promote its 50 per cent stake within the undertaking.
Earlier this yr, Chevron Canada Ltd. mentioned it might cease funding feasibility work on the undertaking. Chevron put its pursuits up on the market in December 2019, however no purchaser has but stepped ahead.
Chevron has written down its funding on the undertaking by $2.2 billion, whereas Woodside has written its funding down by $720 million.
David Austin, a lawyer who focuses on the power business, referred to as the announcement a “large deal.”
“There aren’t many lively gamers left on improvement facet of the LNG business in British Columbia,” he informed International Information.
“Shell is continuing with its part certainly one of (the LNG Canada undertaking) in Kitimat, WoodFirbre nearer to Suaqmish appears to be like like it might ultimately transfer to a remaining funding resolution within the fall, however past that there aren’t quite a lot of lively gamers in B.C. presently.”
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In saying the divestment Tuesday, Woodside acting-CEO Meg O’Neill mentioned the corporate had undertaken a overview of the undertaking after Chevron pulled out.
O’Neill mentioned the corporate had sought to develop new LNG provide for Asian markets later within the decade, however had determined to refocus funds on “alternatives that can ship nearer-term shareholder worth.”
Austin mentioned the undertaking could also be a casualty of the success of renewable power sources and larger and cheaper batteries that may retailer the electrical energy they produce.
“Potential purchasers of LNG don’t wish to decide to long run contracts,” he mentioned.
“One of many causes they don’t wish to decide to long-term contracts is the worth of renewable generated electrical energy equivalent to wind and photo voltaic has dropped 80 to 90 per cent over the past 10 years or so.”
Austin mentioned the Woodfibre LNG undertaking close to Squamish has signed an settlement with British Petroleum for its product, which may assist with a constructive remaining funding resolution subsequent fall.
He mentioned Shell has but to make an announcement on Part 2 of the LNG Canada undertaking.
— With information from the Canadian Press
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