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An artistic rendering of Pacific NorthWest’s LNG export terminal on Lelu Island, near Prince Rupert in northwestern British Columbia.

The consortium behind a massive energy project approved by the federal Liberal cabinet is hesitant about forging ahead even after investing billions of dollars in British Columbia.

Pacific NorthWest LNG, led by Malaysia's state-owned Petronas, will need months to examine more than 190 conditions attached to Ottawa's approval of a proposed B.C. terminal to export liquefied natural gas from Lelu Island.

"Petronas and its partners will study the conditions imposed by the Canadian authorities and conduct a total review of the proposed project prior to deciding on the next steps forward," Petronas said Wednesday in a statement from Kuala Lumpur.

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It was a muted response to an announcement made with great fanfare on Tuesday in Richmond, with Premier Christy Clark lauding the province's four-year fight to get the project approved and federal Environment Minister Catherine McKenna praising the government's insistence on environmental protections, as well as providing an economic boon.

Petronas's response appeared to be a retreat for a company that has bet heavily on Canada's resource industry. In 2012, the Malaysian company paid $5.2-billion to acquire Progress Energy Canada, a natural gas producer in northeast British Columbia.

In total, roughly $36-billion will need to be spent to make Pacific NorthWest LNG's planned exports a reality in 2021.

The budget includes $11.4-billion for the LNG export terminal on Lelu Island and $12-billion related to drilling and natural gas production, of which $5-billion already has been spent on northeast B.C. operations from 2013 to 2015. TransCanada Corp. plans to build two pipelines at a cost totalling $6.7-billion to move natural gas from northeast B.C. to Lelu Island.

Ottawa's decision to give the go-ahead for construction of the terminal near Prince Rupert raises industry hopes for an LNG boom while also setting the stage for protests from environmentalists and some First Nations. Critics, who are worried about increased greenhouse gas emissions and local ecological impacts on salmon, say the conditions don't go far enough to reduce potential environmental harm.

Pacific NorthWest LNG said it needs to scrutinize the array of conditions and review the Canadian Environmental Assessment Agency's 339-page final report.

Pacific NorthWest LNG is aiming to have its planned B.C. export terminal running in 2021, but with the global economics of LNG looking poor due to a glut of supply, industry observers expect the consortium to delay making a final investment decision.

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Ms. Clark's B.C. Liberals campaigned hard to promote LNG's prospects in the 2013 provincial election, boasting that exports of the fuel would transform the provincial economy.

Some industry experts, however, doubt construction will start before British Columbia's general election in May, 2017, and there is uncertainty about whether the co-owners can make the math work so it is worthwhile to proceed.

Eurasia Group, a New York-based political risk firm, said Petronas will likely delay a final investment decision until late 2017, and will then encounter a tough market. The environmental conditions are fairly onerous compared with what many international competitors face, Eurasia group analyst Divya Reddy said.

"Petronas is definitely unhappy with the difficulty of the permitting process and it will certainly give Petronas pause, and delays – especially absent a market recovery – are now more likely," Ms. Reddy said. "Over all, we still think there is political motivation on the part of the Malaysians to move forward. The government wants to make Petronas a global national champion and is taking a longer-term view of the market."

Pacific NorthWest LNG is seeking to overcome the shaky economics of exporting LNG. Prices for the fuel have plunged in Asia over the past couple of years.

While the federal Liberal cabinet's project approval clears the way for construction of the export terminal, the Petronas-led group will need to pare costs just to break even on its operations if LNG prices in Asia stay in doldrums, industry experts say.

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The venture's co-owners are financial backers and also "off-take partners" – long-term buyers of LNG in Asia. In short, the partners have agreed to be both producers and buyers of LNG.

Raymond James Ltd. analyst Andrew Bradford said Pacific NorthWest LNG still makes sense in the long term when considering security of supply and geographic diversification, despite low prices being experienced in the short term. He expects that the LNG project will be constructed eventually because the conditions placed on the project are manageable.

"Most of these conditions are standard safety, monitoring and best construction practices. Several conditions limit certain phases of construction to specific times of the year, while others require stringent environmental protection during construction, particularly around dredging and piling construction," Mr. Bradford said in research note.

Despite concerns from activists, Ms. McKenna insists the energy project would not jeopardize Canada's international commitments on climate change.

"Every project needs to fit in with our national [climate] plan. We understand that," she said in Ottawa. "We've mitigated the emissions from this particular project significantly through a variety of different measures. And clearly, we recognize that this project needs to form part of our national plan."

Matt Horne, B.C. associate director at the Pembina Institute, a clean-energy think tank, said the project would make it impossible for British Columbia to meet its own targets for reducing greenhouse gas emissions, and far more difficult for Canada to meet its national commitments.

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"It's still possible for Canada to get on track with its climate plan even with this plant, but it absolutely makes it far more challenging," Mr. Horne said.

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