Feb 12 (Reuters) - Rio Tinto PLC said on Wednesday it had reached an option agreement with LNG Canada to acquire or lease a wharf and associated land at its port facility in northern British Columbia.
LNG Canada, a joint venture between Royal Dutch Shell PLC , Mitsubishi Corp, Korea Gas Corp and PetroChina Co Ltd, is developing a natural gas liquefaction plant and export terminal in Kitimat, some 750 kms (465 miles) up the Pacific coast from Vancouver.
The agreement, which will give LNG Canada access to Rio Tinto’s deep water port in Kitimat, provides the group with a staged series of options payable against project milestones. Rio did not disclose the financial terms of the deal, saying they were “commercially confidential.”
The LNG Canada project is just one of about a dozen export terminals proposed for British Columbia’s Pacific Coast as companies race to build the infrastructure needed to get cheap Canadian gas to booming markets in Asia.
While top global energy players like Shell, Chevron Corp and Malaysia’s Petronas have already spent hundreds of millions on their Canadian projects, none have made a final investment decision.
That could change soon, as British Columbia is set to release the general framework for its proposed LNG tax regime with its provincial budget on Tuesday, removing a key hurdle holding companies back from those investment decisions.
LNG Canada, which has an export permit and is undergoing an environmental review, has long been considered a front-runner, though expectations were cooled in recent weeks after Shell warned it would cut spending companywide and streamline its operations following a major profit warning.
A final investment decision on the LNG Canada project is not expected until next year.