April 30, 2014 / 8:29 PM / 4 years ago

UPDATE 1-LNG Canada partners nudge project ahead; Shell ups stake

(Changes dateline to Vancouver, adds CEO quotes and project background)

By Julie Gordon

VANCOUVER, April 30 (Reuters) - Royal Dutch Shell Plc’s proposed LNG Canada liquefied natural gas export plant in British Columbia tiptoed closer to reality on Wednesday, with the company signing a formalized partnership agreement with its three Asian partners, nudging the project into the next stage of development.

Shell also boosted its stake in the project to 50 percent from 40 percent, while PetroChina retains its 20 percent interest. Mitsubishi Corp and Kogas will each take a 15 percent interest, down from their former 20 percent share.

With the initial technical work complete, the partners said they will now move ahead with the detailed engineering and design work, along with an ongoing environmental assessment and consultation work.

“It’s important to note that today is not yet the final investment decision to construct the project,” LNG Canada chief executive Andy Calitz told reporters. “We have a number of uncertainties to overcome and work to do.”

The final call on whether the project will go ahead is still 18 to 24 months away, he said. Construction would take about five years, with operations expected early next decade.

The project, in the port town of Kitimat some 1,400 kilometers (870 miles) north of Vancouver, is just one of about a dozen export terminals proposed for British Columbia’s rugged Pacific coast as energy firms scramble to build facilities to move cheap Canadian gas to Asian markets.

Petronas’ Pacific NorthWest LNG project and Chevron Corp’s Kitimat LNG project are considered front-runners in the race to build Canada’s first LNG export terminal, with the LNG Canada project a close third.

With an initial capacity of some 12 million tonnes of LNG per year, each partner will be responsible for sourcing its own portion of the gas, in proportion to its ownership stake, and will then take the same proportional amount of LNG produced.

“For every 100 cargoes that are produced, 15 will go to Kogas, 15 will go to Mitsubishi, 20 will go to PetroChina and 50 will go to Shell,” said Calitz. “As such, for this project, do not expect LNG sales announcements.” (Additional writing by Scott Haggett; editing by Gunna Dickson)

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