Berkshire Hathaway exits $9bn Canadian LNG Project: Press

Warren Buffett's Berkshire Hathaway group has dropped plans to invest C$4bn (US$3bn) in the C$9bn development of an LNG terminal at the port of Saguenay in Quebec, Canada, local press reported on March 5.

The US group's withdrawal was first reported by Montreal-based La Presse. A spokesperson for the project's developer GNL Quebec said a major investor had walked away after months of talks because of protests against energy investments in Canada and the "general political context" in the country. Sources told the newspaper that this investor was Berkshire.

The project, known as Energie Saguenay, aims to export 11mn mt/yr of LNG from fields in western Canada starting in 2025. In addition to liquefaction facilities, it will involve the construction of a 780-km pipeline to be built to transport gas from Ontario to Saguenay.

Discussions on Energie Saguenay have been going on for six years, but the project has been held back by opposition from environmentalists and indigenous peoples.  The project "is not yet compromised," the GNL Quebec spokesperson said. "It is expected that final decisions, whether to go ahead or not, will be made in 2021."

In addition to the national problems of hydrocarbon development projects, now is not an encouraging time for major new LNG export capacity. Spot LNG prices are at long-term lows and show little sign of rising. Asian and European prices for April were both a few cents adrift of $3/mn Btu March 5, leaving not much margin after liquefaction and shipping from the $1.77/mn Btu Henry Hub market.

Both the US company Tellurian and the state of Qatar have eased up on their liquefaction plans, despite having access to the cheapest feedstock gas globally. Tellurian's project would be fed with gas from the US Permian basin, where large volumes are flared as a by-product of oil, and Qatar's gas liquefaction costs are partly offset by sales of accompanying condensate.