Malaysia’s Petronas has scrapped plans to develop the $29bn Pacific NorthWest liquefied natural gas (LNG) project in western Canada, citing weak gas prices.

Petronas said that the decision was made following a thorough review of the project in the wake changes in market conditions.

Planned be built in Lelu Island near the Port of Prince Rupert, the project involves construction of a natural gas liquefaction and export facility to meet the demand from Asian markets.

The project is led by Pacific NorthWest LNG, a consortium involving consisting of Petronas with 62% stake, Japan Petroleum Exploration (Japex) 10%, Petroleum Brubei 3%, Indian Oil 10% and China Petrochemical (Sinopec) 15%.

Japex said that it would a face a loss of $82m as a result of a decision on scrapping the Pacific NorthWest LNG.

The Japanese company participated in the project since 2013 in order to secure long-term supply of LNG to the domestic market through Soma LNG terminal.

However, due to a dramatic change in the circumstances in the LNG industry, the partners have reached a decision not to go ahead with the project, Japex said.

Petronas Upstream executive vice president and chief executive officer Anuar Taib said: “We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision.

“We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward.”

The North Montney Joint Venture is established to develop the resources in the North Montney formation located along the foothills of the Rocky Mountains in northeast British Columbia.

Progress Energy Canada, a wholly owned subsidiary of Petronas, is the operator of the joint venture.

Image: Illustration of the proposed Pacific NorthWest LNG project in Canada. Photo: courtesy of Pacific Northwest LNG.