Prospects for a liquefied natural gas export facility on Canada's west coast are brighter this week after Petronas said it would join the Shell-led LNG Canada project in British Columbia.

The Malaysian state oil giant will take a 25% stake in the proposed facility, leaving Shell with 40% and partners PetroChina and Mitsubishi of Japan each with 15%. South Korea's Kogas will also keep a 5% stake.

While operator Shell said the timing of a final investment decision on the project will depend on global energy markets and the overall competitiveness of LNG Canada, officials have said a project sanction is expected later this year.

A price tag of around C$40 billion (US$32.2 billion) has been put on the two-train scheme, including the liquefaction plant, gas pipeline and upstream gas facilities.

Each of the trains will have capacity of 6.5 million tonnes per annum of LNG, and the project could be expanded to four trains in the future.

Highlighting progress on the project, contractor Fluor confirmed in April that it and JGC of Japan have been awarded an engineering, procurement and construction contract by Shell covering construction of the liquefaction trains for LNG Canada.

That confirmed an Upstream report earlier the same month that the Fluor and JGC partnership had emerged as the Anglo-Dutch supermajor's preferred bidder.

A 2018 final investment decision would be heartening for Canadian natural gas producers, which have seen plans for a number of west coast LNG export facilities shelved, including Petronas' own Pacific NorthWest project at Port Edward in British Columbia.

The Malaysian company pulled the plug on that facility in July of last year.

Canadian producers even started sending their production to the US Gulf Coast to find an outlet for their booming output.

According to consultancy WoodMackenzie, Canada holds nearly 52 trillion cubic feet of reserves and contingent resources, making it the second-largest resource holder in Petronas’ portfolio after Malaysia.

"Consequently, monetisation through LNG is inevitable given the weak outlook for domestic prices," senior analyst Prasanth Kakaraparthi said.

While the developers of the project will benefit from an improved global outlook for LNG, they are also likely to benefit from a warmer regulatory environment in British Columbia.

Although the future of the project was uncertain following the formation last year of a coalition government in the province by the leftist New Democratic Party and Green Party, officials appear to have softened their stance on a west coast LNG facility.

British Columbia Premier John Horgan, a New Democrat who was critical of such projects during the 2017 election campaign, said the recent move by Petronas "bodes well" for a final investment decision on LNG Canada.

Horgan's government earlier this year said it would provide a provincial sales tax exemption on the construction costs of any LNG facility.

The government projected the incentive could add up to a C$6 billion rebate for LNG Canada.

Those that apply for the rebate must meet several conditions, including a "guaranteed" fair return on British Columbia's resources and a promise to protect the province's environment.

Environmentalists, however, said they feel betrayed by Horgan's moves and worry that the construction and operation of the LNG Canada project could have a negative impact on the environment and contribute to climate change.

A 2017 report from the Pembina Institute and the Pacific Institute for Climate Solutions reckons the annual carbon dioxide emissions from the LNG Canada project would exceed 9.6 megatonnes by 2050.

"Greenhouse gas emissions are going to go through the roof with a project of this kind,” Wilderness Committee national campaign director Joe Foy said after Horgan's announcement in March. However, the biggest concern for the project will be costs, which Kakaraparthi said would be a "major factor" in determining a final investment decision.

He said that LNG "will need to lower costs and take advantage of the latest tax breaks announced by the British Colombia government" before it can take a final investment decision.

"We believe this to be a positive development for Petronas," he said.

"We expect the global LNG market to tighten post 2022 and this bodes well for the project. But activity has returned to the LNG space with a number of projects expecting to take FID ahead of 2019.

"A new wave of project sanctions and rising oil prices could push up project costs and dampen the economics," he added.