March 25, 2015 / 9:09 PM / 3 years ago

Shell sees only some Canadian LNG export projects materialising

LONDON, March 25 (Reuters) - Shell expects only a fraction of liquefied natural gas (LNG) export projects already approved by the Canadian government to go ahead in the next decade, an executive said on Wednesday.

Canada has the potential to become one of the world’s top LNG exporters, but projects have yet to begin construction, as roughly 110 million tonnes of government-approved export capacity awaits final investment decisions.

“At Shell we assume that only 15 to 20 percent of the approved projects will materialise by 2025,” Markus Hector, Shell’s general manager of global LNG said.

Speaking at a gas sector event hosted by the High Commission of Canada in London, Hector said that the low forecast success rate was partly due to the scale of the infrastructure projects and the competition for people with the skills to build them.

Sinking oil and gas prices have put the brakes on the development of the LNG industry, with planned U.S. projects being delayed or even scrapped altogether.

Shell is the lead partner in a consortium planning the LNG Canada facility on British Columbia’s northern coast and is not expected to make a final investment decision until at least 2016.

“We are progressing the project, it’s in the development phase, we don’t have any specific impact from commodity prices on the development of the project,” Hector said.

In response to the collapse in prices, oil and gas companies have made drastic cuts to budgets, idled drilling rigs and in some cases cut jobs. Earlier this year Shell said it would reduce its spending over the next three years by $15 billion.

Reporting by Sarah McFarlane; Editing by Ruth Pitchford

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