The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
VANCOUVER — The British Columbia government is promising its fledgling natural gas export industry that an estimated $30-billion in new taxes will not drive companies out of a business they have yet to build.
But an analysis by a U.S. economic firm suggests that liquefied natural gas shipments from Canada will be among the most expensive in the world, leaving the industry “vulnerable” long before it has loaded it first ship.
And companies pursuing LNG projects in Canada say B.C. is comparing itself to the wrong place when it looks to Australia as it sets its own new taxes. Australia, they say, is yesterday’s news. Canada today is competing with the U.S. and massive new offshore gas finds off the east coast of Africa.
Those factors add a substantial wrinkle to B.C.’s effort to close a taxation gap, with the government saying its current “resource rent” system is set up to take in a third less than Australia on LNG exports. Behind closed doors, the government has proposed a new tax system that would collect, in rough terms, an extra $30-billion over the next 30 years from the LNG industry, according to government sources – although that number is preliminary and likely to change as negotiations proceed with industry.
Still, the threat of new taxes has raised eyebrows across the raft of companies working to invest tens of billions in B.C. On Tuesday, Rich Coleman, B.C.’s Minister of Energy, Mines and Natural Gas, sought to allay their fears.
“You need to know we’re your partners in this. You need to know we’re going to make this a win for you,” he told an audience packed with executives and bankers at a B.C. government-organized LNG conference in Vancouver.
He added: “Profit is a very good word. Profit means that everyone wins – and you need to win large enough for your large investments.”
But the profitability of potential LNG investments in Canada came under new scrutiny Tuesday by David Montgomery, a senior vice-president with Washington D.C.-based NERA Economic Consulting. NERA modelling estimated the price necessary for LNG suppliers to turn a profit in different countries.
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/bc-sees-30-billion-lng-windfall-but-hurdles-are-high/article9099128/%3bjsessionid=0dxqRnDDQgvHsd48V8G1YJmBJr0HqF1rGjZnT1WMrGPpCnRh9J2T!-649912445/?ord=1