LNG Canada says it is committed to starting construction on Kitimat, B.C., project in 2018

The chief executive of the LNG Canada project on British Columbia’s northern coast said on Tuesday that the company is committed to starting construction on the $40 billion liquefied natural gas export project this year.

However, company later reiterates no final investment decision has been made

An artist's rendering shows the proposed LNG Canada project in Kitimat, B.C. (LNG Canada/Flickr)

The chief executive of the LNG Canada project on British Columbia's northern coast said on Tuesday that the company was committed to starting construction on the $40 billion liquefied natural gas export project this year.

An investment decision on the terminal in Kitimat, B.C., was delayed in 2016, due to sagging oil prices that hit cash flows, along with an unfavourable supply-demand outlook, but remains on track for 2018, Andy Calitz said at an LNG conference on Tuesday.

"It didn't make sense in July 2016," he said. "When [our stakeholders] asked the inevitable question, when will you reconsider the FID? Our answer was: We will be in construction in 2018. I reaffirm that commitment today."

Calitz later told reporters that a trade spat over imported fabricated industrial steel components (FISC) was no longer an issue for the project and would not have any impact on an investment decision by the joint venture partners.

Slight backtrack 

As word of Calitz's comments spread, LNG Canada issued a statement, reiterating the fact that no final investment decision has yet been made.

"LNG Canada is currently preparing to submit a Decision Support Package for review by our Joint Venture Participants (JVPs) later this year. However, the exact date for an FID is up to the JVPs to make," said director of external relations Susannah Pierce.

B.C. Energy Minister Michelle Mungall made the same observation but said the government was "very encouraged" by Calitz's comments.

"It's good to see that so many people in B.C., investors as well, are excited to see these types of projects go forward," she said, adding that the government's offer of providing a break on carbon taxes and an exemption on provincial sales taxes related to construction costs played a key role.

"We know the framework was very important to this. We need to make sure that B.C. is competitive." 

Tariffs no longer an issue

LNG Canada had asked Canada's Finance Ministry to exempt it from the 45.8 percent anti-dumping tariffs, which apply to certain FISC components imported from Spain, South Korea and China. LNG trains, most of which are built in Asia, are FISC components.

Calitz did not make clear why the FISC duties were no longer an issue, but said the modules have been contracted and the company has more clarity on the parameters and legal application of the tariffs.

LNG Canada is a joint venture between Royal Dutch Shell Plc (RDSa.L), PetroChina Co Ltd (601857.SS), Mitsubishi Corp (8058.T) and Korea Gas Corp (036460.KS). TransCanada Corp (TRP.TO) will build the pipeline.

With files from Justin McElroy