Royal Dutch Shell Plc and its partners are set to announce a decision on their $40 billion (US$31 billion) liquefied natural gas terminal in western Canada as early as next week, amid signs the companies are poised to approve it, according to people familiar with the plans.

LNG Canada — backed by Shell, Mitsubishi Corp., Malaysia’s Petroliam Nasional Bhd., PetroChina Co. and Korea Gas Corp. — would be Canada’s largest-ever infrastructure project. With the capacity to eventually export as much as 26 millions tons per year, primarily to Asia, it would also be the largest new LNG terminal to be sanctioned in years.

Preparations for an Oct. 5 announcement followed by an LNG Canada event and fireworks at the local golf club the next day are underway in Kitimat, British Columbia, the site of the proposed project, said people with direct knowledge of the activities, who asked not to be identified. The situation is fluid and timing could change, the people said.

“We are currently reviewing the decision support package that LNG Canada submitted to joint venture participants,” Shell Canada said in emailed response to questions late Tuesday. Shell declined to comment on the announcement date and whether a final decision has been made.

The group has long said an investment decision will be made this year. British Columbia has set a Nov. 30 deadline for a final decision if the project is to claim as much as $6 billion in tax breaks and savings.

The project may also get a boost from the Canadian government in the form of tariff relief, the Globe and Mail reported Wednesday. The government has agreed to waive import duties on steel needed for the terminal, saving the companies about $1 billion, the paper said, citing people familiar with the plan. The LNG group had sought relief from the duties, arguing that the steel for the massive terminal couldn’t be sourced in Canada. The government is now confident the operators will give the project a green light this year, the Globe said.

“We are hopeful that Shell will make a positive investment decision which will lead to the creation of thousands of jobs,” said Pierre-Olivier Herbert, spokesman for Finance Minister Bill Morneau. “There is due process in place for the remission of surtaxes in the event that there is no domestic supplier, and that process must be followed.”

Source: Financial Post

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