By Julie Gordon
VANCOUVER, Feb 4 (Reuters) - British Columbia's ambitions tobecome North America's next major liquefied natural gas exportertook another hit on Thursday, as Royal Dutch Shell pushed back a final investment decision (FID) on its LNG Canadaproject to late 2016.
The delay came as Europe's largest oil company reported itslowest annual income in over a decade and said it would takefurther steps to cut costs to cope with weak oil prices ifneeded.
LNG Canada, located on British Columbia's rugged northerncoastline, is one of the frontrunners in a now slowing race tobuild Canada's first LNG export terminal. It has already beengranted its key environmental permits.
A Petronas-led project, also in the province's north, wasgiven a conditional FID in June 2015, but an environmentalreview is still underway and could be further delayed by newrules requiring reviews to consider the emissions of upstreamgas production.
British Columbia's ruling Liberals, meanwhile, had beenbanking on having three LNG export terminals in operation by2020, delivering new jobs in the near-term and bolsteringgovernment coffers in coming years.
Shell has in the last year scrapped numerous multi-billiondollar projects, including a controversial exploration projectin the Alaskan Arctic Sea, the Bab sour gas field in Abu Dhabiand Carmon Creek oil sands project in Canada.
"We are postponing the final investment decision on LNGCanada right through the end of this year," Chief Executive Benvan Buerden told investors on a conference call.
The LNG Canada partners - Shell, along with PetroChina CoLtd, Korea Gas Corp and Mitsubishi Corp - had planned to take FID in the first half of 2016.
Despite the delay, the team on the ground remained upbeat,noting that early work is moving ahead and the added time willbe used to further derisk the C$25 billion ($18.22 billion) toC$40 billion ($29.15 billion) development.
LNG prices are sinking as demand for the super-chilled gasslows and new supply from the United States, Australia andRussia is set to hit the market through 2021.
Despite the near-term glut, Shell executives said theyanticipate demand from China and other countries to increasethrough the next decade. ($1 = 1.3724 Canadian dollars) (Reporting by Julie Gordon; Editing by Meredith Mazzilli)
