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article imageKitimat LNG project suffers setback as Shell posts earnings drop

By Karen Graham     Feb 4, 2016 in Business
Premier Christy Clark continues to voice confidence in B.C.'s LNG export project despite Royal Dutch Shell's announcement that it was "postponing" its final investment decision until the end of 2016, instead of in April.
On Thursday, Royal Dutch Shell announced it was postponing its decision on the $40 billion liquefied natural gas export project in Kitimat, B.C. “likely” until the end of this year.
The announcement comes after Shell released its 2015 fourth-quarter figures, which showed a 44 percent slump in earnings. The Financial Post is saying Shell is not alone in reining in its spending due to the severe oil and gas crash. However, the Dutch company is also plagued with worry over a $70 billion acquisition of rival BG Group Plc, which is supposed to be completed by the end of this month.
"Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016," said Shell CEO Ben van Beurden. Shell owns a 50 percent share of LNG Canada.
The Kitimat export terminal is supposed to be constructed on industrial property at the northern end of Douglas Channel.
Other stakeholders in the project include PetroChina Co. Ltd. with a 20 percent stake while the other Asian partners are Japan’s Mitsubishi Corp. and South Korea’s Korea Gas Corp., each with a 15 percent interest.
CBC News Canada asked LNG Canada for an interview and they responded with a statement: "We have always stated that our Joint Venture Participants plan to make a Final Investment Decision in 2016," wrote Andy Calitz, CEO of LNG Canada. "We are pleased, given the current oil and LNG prices, and turmoil in global energy markets, that the Joint Venture Participants in LNG Canada are still working towards a Final Investment Decision for the proposed facility later this year."
Premier Christie Clark is remaining optimistic about the setback, saying it was good news to hear that Shell was just postponing its investment decision until the end of the year, reports the Vancouver Sun.
"To me the good news is that when you see energy projects getting canceled all over the world Shell Canada, LNG Canada announced that they are recommitting to the project in British Columbia," said Clark. "The dates changed, but their commitment to it hasn't."
Shell has responded to the energy crisis by slashing billions of dollars in spending, as well as reducing its global workforce by 10,000 employees. It is going to be interesting to see what happens with its $70 billion acquisition of the BG Group Plc in a few weeks.
More about kitimat LNG project, Royal dutch shell, fourth quarter earnings, slump in oil prices, investment decision
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