Japan-US venture to build Canadian LNG plant

Japanese engineering giant JGC Corp. said Tuesday it has won a contract to help build a Canadian liquefied natural gas plant in a deal reportedly worth $9.4 billion. JGC said its joint venture with US-based Fluor Corp. was awarded the tender by Chevron Canada to design and build the Kitimat LNG plant in the western province of British Columbia. Chevron and Apache Canada each hold a 50 percent interest in the proposed plant, which will have an annual capacity of 11 million tonnes of LNG, according to a JGC statement. Neither JGC nor Fluor announced financial details of the contract or when construction would begin. Japan's leading Nikkei business daily reported that the site would process natural gas into its liquefied form before being shipped to Japan and other markets. It added that the one trillion yen ($9.43 billion) plant would be Canada's first major LNG production facility. LNG shipments could start as early as 2018, the Nikkei said. Resource-poor Japan, the world's largest importer of LNG, has increasingly turned to alternative energy sources after shutting down its nuclear reactors in response to the 2011 Fukushima atomic disaster. The deal comes as Japan and its neighbours look to scrap the so-called "Asian premium". Asia's importers have for years paid sharply higher LNG prices than in Europe and North America because their contracts are often long-term and linked to oil prices. The trend has remained intact despite increasing global production of LNG, particularly in the United States.