Tax regime key issue for LNG producers

MULTINATIONAL liquefied natural gas companies may be competitors when selling the product around the world but will lobby together locally

  • Sun Oct 12th, 2014 6:00pm
  • News

MULTINATIONAL liquefied natural gas (LNG) companies may be competitors when selling the product around the world but they’ve enough in common to lobby for mutually beneficial causes.

Topping that list is a tax regime in B.C. that’s acceptable to the companies who make up the newly-formed B.C. LNG Alliance, said its president last week.

“What we’re looking for is good fiscal policy: a clear, stable and competitive fiscal regime,” said David Keane during the launch of the alliance at an event held in Terrace Oct. 7.

The provincial government is so far promoting the creation of a new two-tier tax structure over and above any other taxes LNG producers might pay.

That’s tied to the B.C. Liberal campaign pledges of the 2013 provincial election in which Premier Christy Clark said LNG producers could provide up to $100 billion leading to a provincial legacy fund which would, among other things, wipe out the provincial debt.

But the provincial government has been slow in fully introducing its tax plan and one large energy company, Malaysian-owned Petronas, which has a large stake in a planned LNG plant at Prince Rupert, has warned it might put its project on hold should the tax be introduced.

Keane said that while Petronas is a member of the alliance, he could not speak on behalf of the company when it came to specific issues such as taxation.

“What I can say is we are waiting to see the [taxation] legislation in detail,” said Keane.

“Having a clear, stable fiscal regime will help make final investment decisions.”

If the alliance, made up of companies involved in six planned LNG projects, is concerned about provincial issues such as taxation, it’s also concentrating on exactly who will build the multi-billion dollar projects.

Keane, who has been involved on a provincial body examining skills development and training, said the direction is to first train B.C. residents.

“Our goal is to hire in B.C. first and Canada second and then outside of Canada if needed,” said Keane.

With some projects, if they proceed, requiring as many as 4,000 workers and with some of those needing to have specific skills, the prospect of needing to look outside the country raises the issue of temporary foreign workers.

“If we can’t find those skills, then clearly we’ll have to look outside [the country],” said Keane.

Keane said it was important for the alliance to have its first official event in the northwest to show that its members wish longstanding business and other relationships with the region’s residents.

Kitimat LNG, which is a partnership between Chevron Canada and Apache Canada; LNG Canada, whose partners are Shell Canada, PetroChina, KOGAS from Korea and Mitsubishi from Japan and who wants to build a plant at Kitimat; Pacific Northwest LNG, which is Petronas, Japex from Japan, Indian Oil Corporation, Sinopec from China and PetroleumBrunei; and Prince Rupert LNG, which is owned by BG Canada, are the first four projects to join the alliance.

Two other projects have joined recently – Woodfibre LNG, which is being proposed near Squamish, and Triton LNG, whose partners are AltaGas from Calgary and Japanese-owned Idemitsu Canada and which is looking at locations in Prince Rupert and Kitimat.