B.C., Petronas sign LNG intent letter

VICTORIA — The Liberal government’s plan to charge oil and gas companies a liquefied natural gas tax of up to seven per cent is the subject of ongoing negotiations, Finance Minister Mike de Jong said Monday.

VICTORIA — The Liberal government’s plan to charge oil and gas companies a liquefied natural gas tax of up to seven per cent is the subject of ongoing negotiations, Finance Minister Mike de Jong said Monday.

Discussions about cost are included in a letter of intent Premier Christy Clark signed in Malaysia with energy giant Petronas to secure long-term investments in LNG in British Columbia.

“Petronas has requested the province provide certainty about costs that are under the control of the province and that are applicable only to LNG investments,” said the letter, also signed by Petronas president Tan Sri Dato’ Shamsul Azhar Abbas.

Petronas and its affiliates Pacific Northwest LNG and Progress Energy Canada propose to build a multibillion-dollar LNG export facility near Prince Rupert.

The letter of intent includes the government’s request to Petronas that it work towards reaching a final investment decision on its proposal.

Terms of reference for a project development agreement between the company and the government are due June 30 and an agreement deadline is Nov. 30, but the letter of intent is not legally binding.

De Jong said talks about adjusting the government’s LNG tax structure have been ongoing since last February when he introduced a proposed tax structure as part of his budget.

At the time, de Jong joked that the companies would prefer a tax structure of zero per cent.

The government’s proposed plan calls for a two-tiered LNG tax. The first tier of 1.5 per cent is to be introduced at the start of production. The second tier, when introduced, could rise to seven per cent once the plant is running and capital costs have been deducted, de Jong said.

The plan includes no forecasts of LNG revenues because there are currently no LNG plants in operation. Of the major LNG projects being proposed for northern B.C., the earliest production timeline is 2018.

“The proponents would like to see the cost structure as low as possible,” de Jong said. “In the aftermath of the budget, as I predicted on budget day, there have been suggestions of adjustments. What the premier and the folks in Malaysia have agreed to at the highest level is to continue to work and set a pretty aggressive timeline to deal with the next steps towards a final investment decision.”

The Canadian Association of Petroleum Producers, which represents major oil and gas companies, said earlier that it was lukewarm towards the proposed LNG tax regime. B.C. spokesman Geoff Morrison said the plan provides a framework but more work needs to be done on the rates.

Pacific Northwest LNG spokesman Greg Kist also has also said the company is looking for clarity from the government on the tax regime before making a final investment decision by the end of the year. Kist is currently in Malaysia as part of Clark’s LNG visit.

De Jong suggested the seven-per-cent number may not be the final figure when the government introduces its LNG legislation in the fall.

“Remember what I said. I said ’up to’ and was clearer in February we were working with the proponents to arrive at final figures that we intend to enshrine legislatively this fall,” de Jong said. “When I said ’up to,’ that suggested we were going to work through to finalize the numbers.”

Clark has frequently touted B.C.’s plans to develop LNG export terminals as a generational opportunity worth up to a trillion dollars, with the potential to create up to 100,000 jobs.

NDP Leader John Horgan said he’s concerned the Liberals are prepared to make huge potential economic sacrifices to coax oil companies to sign LNG deals.

“What I want to see is a clear business plan and an absolute guarantee from Ms. Clark that she’s not going to sell the farm just to get a signed agreement,” he said.

A report released last week by the Centre for Canadian Policy Alternatives suggested the B.C. government must lower its LNG revenue expectations.

Economist Mark Lee said the government’s touted returns of $100 billion are “a little more than wishful thinking.”

The report analyzed forecasts for Asian energy markets, the time and cost associated with developing the LNG industry, plans to earn royalties from gas extraction, and LNG income tax.

It concluded that India, Japan, Korea, China and Taiwan, which account for 70 per cent of LNG imports, are forming a “buyer’s club” on price, making it far less likely that they will continue to pay top dollar for imported LNG.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Rebels goalie Chase Coward tries to find a loose puck during WHL action at the Centrium earlier this season. (Photo by ROB WALLATOR/Red Deer Rebels)
Changes on the horizon for Red Deer Rebels next season

New coach, roster adjustments among top priorities for Sutter this offseason

Renovations and construction have begun at Red Deer Dream Centre. (Photo contributed)
Renovations underway at Red Deer Dream Centre

Christian-based addictions treatment centre

Red Deer County's municipal planning commission gave approval for a new directional sign for a business located near Elnora.
(Image from Red Deer County)
Red Deer County garden centre and winery gets sign approved

Delidais Estate Winery and DA Gardens is located near Elnora

(Advocate file photo)
Red Deer County approves home-based hair salon

Salon would be located in rural residential area just west of Innisfail

Alberta Premier Jason Kenney. THE CANADIAN PRESS/Jason Franson
Here is a list of latest COVID-19 restrictions in effect in Alberta

New mandatory health restrictions are now in effect in Alberta. Additional restrictions… Continue reading

In this Thursday, May 14, 2020 photo, a doctor holds his stethoscope during a patient visit in Blackburn, England, amid the coronavirus pandemic. Doctors in British Columbia are being warned they could face investigation or penalties from their regulatory body if they contradict public health orders or guidance about COVID-19. THE CANADIAN PRESS/Hannah McKay/Pool Photo via AP
B.C. doctors could face penalty for veering from COVID-19 health guidelines: college

B.C. doctors could face penalty for veering from COVID-19 health guidelines: college

A vial of the  AstraZeneca COVID-19 vaccine is shown at a facility in Milton, Ont., on Wednesday, March 3, 2021. Alberta says it won't give out more first doses of the Oxford-AstraZeneca vaccine for the time being.THE CANADIAN PRESS/Carlos Osorio - POOL
Hope for a good summer with one dose in arms, if we ‘crush’ COVID-19: Trudeau

Hope for a good summer with one dose in arms, if we ‘crush’ COVID-19: Trudeau

FILE-In this Wednesday, March 17, 2021 file photo, A make-shift memorial is seen outside a business where a multiple fatal shooting occurred on Tuesday, in Acworth, Ga. Robert Aaron Long, 22, accused of killing eight people, six of them women of Asian descent, in shootings at three Atlanta-area massage businesses was indicted Tuesday, May 11, 2021, on murder charges, and a prosecutor filed notice that she'll also seek hate crime charges and the death penalty. (AP Photo/Mike Stewart, File)
Prosecutor plans to seek death penalty in spa shootings

Prosecutor plans to seek death penalty in spa shootings

Labour Minister Harry Bains arrives at B.C. Legislature in Victoria, B.C., on Monday, June 26, 2017. THE CANADIAN PRESS/Chad Hipolito
B.C. pledges to introduce permanent paid sick leave program in January

B.C. pledges to introduce permanent paid sick leave program in January

In this June 8, 2017, file photo, fresh nuts, bolts and fittings are ready to be added to the east leg of the pipeline near St. Ignace, Mich., as Enbridge prepares to test the east and west sides of the Line 5 pipeline under the Straits of Mackinac in Mackinaw City, Mich. THE CANADIAN PRESS/AP-Dale G Young/Detroit News via AP, File
‘Massive and potentially permanent disruption’: Canada’s bleak view of Line 5 closure

‘Massive and potentially permanent disruption’: Canada’s bleak view of Line 5 closure

A Suncor logo is shown at the company's annual meeting in Calgary, Thursday, May 2, 2019.THE CANADIAN PRESS/Jeff McIntosh
Oilsands producer Suncor and utility Atco to pursue ‘world-class’ hydrogen project

Oilsands producer Suncor and utility Atco to pursue ‘world-class’ hydrogen project

A street sign along Bay Street in Toronto's financial district is shown on Tuesday, January 12, 2021. THE CANADIAN PRESS/Nathan Denette
North American stock markets rally to pare early losses over inflation concerns

North American stock markets rally to pare early losses over inflation concerns

This photo provided by World Food Prize shows Shakuntala Haraksingh Thilsted.  On Tuesday, May 11, 2021, Thilsted was named this year's recipient of the $250,000 World Food Prize, which was created by Nobel Peace Prize laureate Norman Borlaug in 1986 to recognize researchers who have improved the quality and availability of food. (Finn Thilsted/World Food Prize via AP)
World Food Prize goes to nutrition expert for fish research

World Food Prize goes to nutrition expert for fish research

Most Read