Repsol abandons its LNG terminal project on Canada’s east coast

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Repsol has decided not to develop a liquefied natural gas terminal on Canada’s east coast because it would cost too much to ship the gas to the terminal, the company said on Thursday.

The Spanish company had been studying the development of a liquefied natural gas (LNG) export terminal in Saint John, in the Canadian province of New Brunswick, to supply European markets, as part of a series of measures around the world to secure alternative supplies to Russian gas following the invasion of Ukraine.

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

A spokesperson for Repsol (BME:REP) said in a statement that, after a study conducted by the company, it was determined not to continue with the Saint John liquefaction project since the tolls associated with it made it unprofitable.

Last summer, Repsol CEO Josu Jon Imaz said the company would need a buyer who committed to signing a 15- to 20-year gas purchase agreement, as well as new pipeline infrastructure and toll agreements to transport the gas to the Atlantic coast.

European countries scrambled to seek new gas supplies last year when prices soared following Russia’s invasion of Ukraine, prompting German Chancellor Olaf Scholz to visit Canada in August in hopes that the world’s sixth-largest producer could speed up exports to Europe.

In early 2022, the Canadian government held talks with Repsol and private company Pieridae Energy about the possibility of accelerating their LNG projects on the east coast, but Ottawa’s support appeared to fade even before Scholz’s visit.

A spokesman for Natural Resources Canada said Repsol had informed the Canadian government that there were no business reasons to build a terminal on the east coast.

“We will continue to stand with our European friends and allies as they accelerate their transition to clean energy and eliminate their dependence on Russian energy,” spokesman 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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