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Malaysian energy giant Petronas to cancel the production of an $11.4-billion liquefied natural gas terminal on the B.C. coast.

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British Columbia's new NDP government says it will continue to encourage the LNG industry to commit to the province, despite the decision by Malaysian energy giant Petronas to cancel an $11.4-billion liquefied natural gas terminal on the B.C. coast.

The decision prompted jubilation from environmentalists, and accusations from the former minister responsible for the file that the NDP's lack of enthusiasm for the industry cost the province dearly in potential jobs.

The chief of the Kitselas First Nation, which had backed the project, said the news is a serious economic blow.

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RELATED: Malaysia's Petronas scraps $11.4-billion Pacific NorthWest LNG project in B.C.

Joe Bevan said he is disappointed at the demise of the terminal, which would have created jobs in the region, but accepts the company's assertion that economic conditions such as low prices for the product are to blame.

"This means a lost opportunity not just for ourselves, but for our region," Mr. Bevan said from Terrace, B.C. The operating plant, he said, would have created about 80 to 100 skilled jobs. "We probably will never see an opportunity like this again."

John Helin, mayor of the Lax Kw'alaams band, who also supported the project, said it was too early to react to Tuesday's news. "Right now, I don't have anything to say. I am just digesting the information," he said in an interview.

British Columbia's new Energy Minister, Michelle Mungall, acknowledged the Petronas decision is going to affect First Nations communities. She said she would be reaching out to them on Tuesday along with Indigenous Relations Minister Scott Fraser.

"Right now, it's a conversation we need to have and I don't want to pre-empt that conversation by talking to the media first about what I am going to say to them," Ms. Mungall said in an interview. "I just don't think that's in the spirit of reconciliation."

She also said she will reach out to other affected communities.

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"There will be a lot of conversations in the days ahead."

Tuesday's development for a government barely a week into power marks the first of many likely challenges managing energy issues.

Also Tuesday, the new Attorney-General said the NDP won't artificially delay permits for the controversial Trans Mountain pipeline expansion despite Premier John Horgan's vow to use all available tools to stop it. David Eby said the province cannot deliberately stall permits without risking a costly lawsuit.

Despite the grim Petronas news, Ms. Mungall also said she'd had "wonderful conversations" with at least three LNG proponents about their projects, and the government's interest in working with them.

Royal Dutch Shell PLC, which is advancing a $40-billion LNG Canada plant in B.C. for exporting product, said in a statement on Tuesday that the company is considering its market options, but "British Columbia is known around the world for its abundance of natural resources and we continue to see the province as playing a key role in meeting rising global energy demand into the future, which includes various forms of energy."

During the spring election campaign, the NDP was skeptical about the BC Liberals' enthusiasm for LNG's economic prospects, but Ms. Mungall said the government is conditionally interested in seeing the LNG sector move forward. She said conditions around a fair profit for B.C., a meaningful role for First Nations and environmental impact are "a road map and not a road block."

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She said there was no warning that Tuesday's news was coming from Petronas. However, in the interview and a previous news conference, Ms. Mungall said the company told her the decision hinged on global market pricing. "They made their decision at their pace," she said.

In a conference call on Tuesday, Anuar Taib, chief executive officer of Petronas's oil and gas production division, said the change in government in B.C. did not factor into the decision to pull the plug on the project. Instead, he said market conditions turned unfavourable since the company first proposed plans for the major export plant in 2013.

"Unfortunately for us, we don't believe that we have that mix of where the sweet spot can be hit," he said. "Because of that we decided to stop the project."

The BC Green Party has been outspoken in dismissing LNG – a stand repeated Tuesday by Leader Andrew Weaver. "B.C.'s future does not lie in chasing yesterday's fossil fuel economy," Mr. Weaver said in a statement. "It lies in taking advantage of opportunities in the emerging economy in order to create economic prosperity."

However, Ms. Mungall said the NDP would work through disagreements on the issue with the Greens.

With reports from Jeff Jones in Calgary and The Canadian Press

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