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Risk of stranded LNG assets is 'real', Canada’s Wilkinson says

Energy Minister Jonathan Wilkinson

Energy Minister Jonathan Wilkinson

14th February 2024

By: Bloomberg

  

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The US decision to pause approvals of new licenses to export liquefied natural gas is welcome, and there are “real” risks that some infrastructure will end up stranded, Canada’s Energy Minister said.

The Administration of US President Joe Biden is “doing the right thing” and is following on the footsteps of Canada’s measures to fight climate change, Jonathan Wilkinson said in a Bloomberg TV interview in Paris. “Increasingly, there is a lot of skepticism about how many more LNG facilities are going to be required and the risk of stranded assets is a real one.”

“It is incumbent on the United States to have a hard look at that,” he added.

The Canadian official’s comments come after the US administration decided at the end of January to halt the approval of new LNG export licenses while it scrutinizes how the shipments affect climate change, the economy and national security. The move strikes at the heart of the debate over LNG’s role in the future of energy, with advocates contending it’s crucial for getting developing nations to stop using coal and enabling Europe to power its economy without Russian gas.

Environmentalists, meanwhile, warn that building the enormous infrastructure required to ship LNG ensures it will be burned for generations to come. Wilkinson shared that view, arguing LNG may be used to “displace future renewables which doesn’t help us at all from a climate perspective.”

Wilkinson was speaking on the sidelines of an event celebrating the 50th anniversary of the International Energy Agency in Paris this week.

Following Biden’s announcement, buyers in Asian nations that import LNG — particularly China and Japan — have started looking for alternatives to offset potential delays to US projects, Bloomberg has reported.

Some options could include projects being developed in Canada. While it has moved much more slowly than its southern neighbor in building out LNG export infrastructure, multiple terminals on its west coast are expected to come online over the next few years. That includes LNG Canada, a large facility backed by Shell Plc, Mitsubishi Corp. and PetroChina, which is nearing completion.

Two other smaller export terminals, Cedar LNG and Woodfibre LNG, have also been approved for construction.

Edited by Bloomberg

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