(Adds Alberta government comment, updates share price)
By Nia Williams
CALGARY, Alberta, March 15 (Reuters) - Canada's Imperial Oil Ltd will delay its C$2.6 billion Aspen oil sands project in Alberta by about a year after the provincial government imposed output cuts to tackle pipeline bottlenecks, the company said on Friday.
The Calgary-based producer and refiner, majority owned by Exxon Mobil Corp, said it has slowed the pace of development of the 75,000 barrel per day project in northern Alberta, where first output was expected in 2022.
Alberta introduced temporary oil production cuts earlier this year to tackle congestion on export pipelines that led to a glut of crude in the province and record discounts on Canadian barrels.
The move was slammed by companies with refining operations like Imperial Oil and Husky Energy, which have seen the cost of crude feedstock rise.
Imperial said government intervention in the market sends a negative message to investors about doing business in Alberta and Canada.
"We cannot invest billions of dollars on behalf of our shareholders given the uncertainty in the current business environment," Imperial Oil Chief Executive Officer Rich Kruger said in a statement.
Canada is the world's fourth-largest oil producer and home to the world's third-largest reserves, but is struggling to build new export pipelines to get barrels to market because of regulatory delays and environmental and aboriginal opposition.
The latest blow to the industry came earlier this month when Enbridge Inc said its Line 3 pipeline project, due to start shipping crude by the end of this year, would be delayed until the second half of 2020.
The Alberta government said the Aspen decision was not surprising, and highlighted other challenges facing the energy industry, including proposed changes to how the federal government regulates major projects like pipelines.
"We're disappointed with Ottawa's regulatory uncertainty and the pipeline delays that are strangling Alberta's oil and gas sector," spokesman Michael McKinnon said.
Imperial also said it is concerned about unintended consequences of the government curtailments, including the "negative impact on rail economics".
Shippers generally need a discount on Canadian heavy crude of at least $15 a barrel below U.S. oil futures to be able to make money on transporting crude by rail. Benchmark Canadian heavy was last trading around $10 a barrel below U.S. crude, according to Net Energy Exchange.
Last month Kruger said Imperial was grinding rail shipments to a near halt and warned investors the company was reviewing the Aspen project.
Imperial shares were last down 0.3 percent on the Toronto Stock Exchange at C$36.66.
"The uncertainty in western Canada from a crude oil takeaway capacity standpoint, especially with the delay to Line 3, is such that it's not unexpected to see this project delayed," said AltaCorp Capital analyst Nick Lupick. (Additional reporting by John Benny in Bengaluru; Editing by Anil D'Silva and Alistair Bell)