Canada groups continue legal challenge against permit for Petronas' scrapped LNG project

KUALA LUMPUR (Reuters) - Canadian environmental and aboriginal groups said they will push ahead with a lawsuit seeking to scrap an environmental permit granted to Malaysia’s Petronas for a liquefied natural gas (LNG) facility in British Columbia, despite the oil and gas firm’s announcement last month that it was scrapping the project.

A representative for the groups filing suit against the Canadian government told Reuters they wanted the permit granted by the Canadian Environmental Assessment Agency overturned so that the C$36 billion ($28 billion) plan for an LNG export facility on Lelu Island in northwest British Columbia can’t be resurrected in the future by Petronas or any other operator.

Petronas declined to comment on the lawsuit.

The Malaysian state energy firm said last month that it was pulling out of the project, a consortium in which it has a 62 percent stake, due to weak gas prices. It had received the environmental permit after a three-year wait but with 190 conditions that aimed to limit the environmental impact of the project.

Still, minority stakeholder Indian Oil Corp Ltd, which owns a 10 percent stake in the project, said last week that the consortium was scouting for a new, cheaper location for the export terminal.

Petronas declined to comment on whether it was involved in a search for a new location, but said it continues to look at opportunities to monetize its gas resources in North Montney, Canada.

Market conditions and infrastructure costs made the Pacific Northwest LNG terminal “economically unviable at this time”, Petronas said in an email.

Environmental group SkeenaWild and two First Nations groups had filed a lawsuit in Vancouver in October, claiming the Canadian government’s environmental assessment was invalid and that the project would have significant and adverse environmental effects.

“We are continuing with the lawsuit until either they (Petronas) give up the environment certificate or the federal government revokes it,” Greg Knox, executive director of SkeenaWild, told Reuters by telephone.

“The reason we are doing that is that we are concerned they could come back at a later date and build there, or that they could try to sell their permit to another company that wants the facility,” he said.

Canada’s environmental agency did not respond to requests for comment.

($1=1.2663 Canadian dollars)

Reporting by A. Ananthalakshmi; Editing by Kenneth Maxwell