PETROCHINA Co and three partners will jointly develop a liquefied natural gas export facility in Canada as a surge of shale gas supply in North America creates a surplus and pushes prices below levels in other markets.

The decision adds to a list of projects planned in Canada and the US, which are shifting global LNG supply from higher cost regions such as Australia toward North America.

Royal Dutch Shell will own 40 percent of the Canadian project, with PetroChina, Korea Gas Corp and Japan's Mitsubishi Corp each holding 20 percent, a joint statement said yesterday.

The proposed project, near Kitimat, British Columbia, will initially consist of two LNG processing units referred to as "trains," each able to produce 6 million tons of LNG annually, with an option to double that.

The partners will decide around 2015 the final investment amount to be injected into the project. Once the decision is made the project can start up around the end of the decade, pending regulatory approvals, the statement said.

A surge in shale gas supply over the past decade has prompted North American energy firms to seek buyers. But a debate has arisen in the US over whether the cheap resources should be kept home.

Analysts expect North America to become a major new LNG export region, and projects in Australia could be at risk.

"While Australia has benefited enormously from limited supply competition over the past few years, this is coming to an end," Sanford C. Bernstein analyst Neil Beveridge wrote recently. "While Australia still has abundant natural gas, it is also the most expensive in terms of new LNG projects."

Source:shanghaidaily.com