CALGARY, Alberta (Reuters) - China’s CNOOC Ltd (0883.HK) said on Thursday it will end the feasibility study for its (LNG) export terminal on British Columbia’s coast due to low global commodity prices, in the latest setback for Canada’s energy industry.
Nexen Energy, a unit of CNOOC, said in a statement the current macro-economic environment does not currently support developing a large LNG business.
The project, a joint venture with Japan’s Inpex Corp (1605.T), would have had the capacity to export 24 million tonnes of LNG per year, granting Canadian gas producers access to the Asian market.
The decision followed the scrapping of another LNG terminal on Canada’s west coast by Royal Dutch Shell PLC’s (RDSa.L) and the sale of around $23 billion in oil sands assets by international firms.
It also came after the rise in July of a left-leaning government in British Columbia backed by the environmentalist Green Party, which has fueled uncertainty about energy development in the province.
Nexen said its gas exploration and extraction in the region will continue, and the partners will “monitor the North American gas market to evaluate future ... investments according to market conditions.”
The company said it had been doing its study for four years, gauging the feasibility for liquefying and shipping natural gas from the northwest B.C. coast to Asian markets.
China’s state-owned CNOOC acquired Nexen for $15.1 billion in a deal announced in 2012.
There are currently no LNG export terminals in Canada, though B.C.’s former provincial government had made the development of the nascent industry its top economic priority in an effort to tap into surging Asian demand for natural gas.
Nexen’s Aurora LNG project was among more than a dozen proposed, although only the C$1.6 billion ($1.31 billion) privately-held Woodfibre project has been given the green light by its developers.
Reporting by Ethan Lou; Editing by Lisa Von Ahn and Paul Simao