Repsol scraps plans for east coast Canada LNG terminal

(Reuters) - Repsol has decided against developing a liquefied natural gas (LNG) terminal on Canada's east coast because it would cost too much to ship the gas to the terminal, the company said on Thursday.

Spanish company Repsol had been looking into developing an LNG export terminal in Saint John, New Brunswick, to supply European markets, part of a global push to secure alternative supplies to Russian gas following the invasion of Ukraine.

But to reach the terminal gas would have to be transported thousands of kilometers from western Canada, requiring new pipeline capacity through Canadian provinces and northeastern U.S. states that in the past have resisted fossil fuel development.

"Following a study carried out by the company, it was determined to not continue with the Saint John liquefaction project as the tolls associated to it made it uneconomical," a Repsol spokesperson said in a statement.

Last summer Repsol CEO Josu Jon Imaz said the company would need a buyer to commit to a 15- to 20-year offtake agreement for the gas, as well as new pipeline infrastructure and tolling agreements to get the gas to the Atlantic coast.

European countries scrambled to source new gas supplies last year as prices rocketed following Russia's invasion of Ukraine, prompting German Chancellor Olaf Scholz to visit Canada in August in the hope the world's sixth-largest producer could expedite exports to Europe.

Earlier in 2022, the Canadian government was in talks with Repsol and privately owned Pieridae Energy about potentially accelerating their LNG projects on the east coast, but Ottawa's support appeared to wane even before Scholz's visit.

A spokesperson for Canada's Natural Resources Ministry said Repsol has informed the Canadian government that there was no business case for an east coast terminal.

"We will continue to support our European friends and allies as they accelerate their clean energy transition and eliminate their dependence on Russian energy," spokesperson Ian Cameron said. "It is up to individual proponents to ensure the economic viability of their proposed projects."

Pieridae Energy did not immediately respond to a request for comment.

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