Canada has approved Equinor’s proposed Bay du Nord offshore oil project, based on an environmental assessment that concluded it would not lead to any significant adverse effects.

Estimated to cost $12bn, the project is located approximately 500km off the coast of Canada’s Newfoundland and Labrador province.

The oil project will involve the construction of a floating production unit for storage and offshore offloading (FPSO), which will be used to drill an estimated 300 million barrels of light crude oil in the Atlantic Ocean, according to Reuters.

Under the government’s decision, Equinor is required to comply with 137 legally-binding conditions throughout the operational life of the project.

The conditions include requirements to lower greenhouse gas emissions, and steps to protect fish and fish habitats, species at risk, migratory birds, air quality, human health, and the use of resources by Indigenous peoples.

Although a final investment decision has not yet been made by Norway’s Equinor, and its project partner Cenovus Energy, the Norwegian firm said it welcomed the decision by the Federal Environment Minister Steven Guilbeault.

Equinor was cited by the news agency as saying: “We now look forward to progressing this key investment in Canada, which has the potential to produce the lowest carbon oil in the country.”

The project’s environmental assessment was carried out by the Impact Assessment Agency of Canada over a period of four years.

Canadian Environment and Climate Change Minister Steven Guilbeault said: “The project has undergone a robust federal environmental assessment and scrutiny through every part of Canada’s legislated review process.

“As the demand for oil and gas falls throughout the coming decades, it will be more important than ever that Canadian projects are running at the best-in-class, low-emissions performance to play a competitive role.”

The decision statement requires Equinor to achieve net-zero greenhouse gas emissions by 2050.

Equinor will now move ahead in securing the required authorisations and permits from federal departments, and the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), for the project.

Earlier this month, Equinor announced that it had made a significant oil and gas discovery in the Kveikje prospect, in the Norwegian North Sea.