May 31 (UPI) -- Shell's subsidiary in Canada said a transaction that gives Malaysian energy company PETRONAS a stake in a planned LNG facility isn't a statement on timing.
Shell and its equity partners behind LNG Canada, a joint venture steering a liquefied natural gas project planned for British Columbia's port city of Kitimat, said Petroliam Nasional Berhad, better known as PETRONAS, is taking a 25 percent stake in the project.
The joint venture behind the project is already in the process of finalizing an engineering contract for service companies JGC Corp. and Fluor Corp.
According to Shell, British Columbia holds "one of the largest and most accessible sources of natural gas in the world" in its Montney shale. If built, the LNG facility would be able to capitalize on those resources in a way that bridges the gap to a low-carbon economy.
The Dutch supermajor has committed to cutting its carbon footprint in half by 2050 and said it would invest about $2 billion per year on alternative energy solutions until the end of the decade.
The move in by PETRONAS, however, does not put the project closer to a final investment decision.
"The timing and outcome of an FID will be decided by joint venture participants based on global energy markets, and the overall competitiveness and affordability of the project," Shell stated.
Shell teamed up with its Asian partners in 2012 to develop a proposal for an LNG export hub in western Canada. The project would consist of two LNG processing units that could produce as much as 6 million tons of super-cooled gas per year each and, with Asian economies among the largest consumers of LNG in the world, Shell's partners at the time said the project would be a valuable asset.
Some provincial lawmakers and First Nations had objected to regional oil and gas ambitions, however, saying they posed a threat to the regional environment. Similar objections nearly thwarted plans by Kinder Morgan to triple the capacity of the Trans Mountain oil pipeline to the western cost of Canada. The federal government this week said it would help finance the project.
Two years ago, the joint venture behind the LNG project in British Columbia said it was delaying a final investment decision indefinitely, citing a weak market and capital constraints. Shell in 2016 was re-examining its portfolio after a mega-merger with British energy company BG Group.
In May, a Shell subsidiary said it established an underwriting agreement with banks like Goldman Sachs to sell the 97.5 million shares it holds in Canadian Natural Resources Ltd., which represents the Dutch supermajor's entire holdings, for $3.3 billion.