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VANCOUVER and and VICTORIA — Malaysia’s state-owned energy company is picking a fight with British Columbia over its handling of the province’s fledgling liquefied natural gas industry, creating a rift that threatens a major project and further clouds Canada’s natural-resource ambitions.
Shamsul Azhar Abbas, the chief executive officer of Petronas, is warning that unless the B.C. government unveils competitive tax and regulatory rules next month, he will cancel plans to spend an estimated $36-billion on the Malaysian-led energy project called Pacific NorthWest LNG. The massive budget includes nearly $11-billion for an export plant to be built at Lelu Island in northwestern B.C.
“Rather than ensuring the development of the LNG industry through appropriate incentives and assurance of legal and fiscal stability, the Canadian landscape of LNG development is now one of uncertainty, delay and short vision,” Mr. Shamsul told the Financial Times. Canada is “already 40 years behind in the game.”
The dispute pits Petronas against a province that has been striving to turn its rich reserves of natural gas into a vibrant new industry that would create tens of thousands of jobs and a lucrative stream of tax revenue. It comes as Canadian energy companies are increasingly running into roadblocks in their efforts to bring more oil and gas to global markets. Major oil pipeline developments have been held up by opposition from environmentalists and First Nations, as well as political conflict.
B.C. Premier Christy Clark played down the comments from Mr. Shamsul, saying British Columbia has bountiful natural gas reserves that many companies would love to tap into and export from the West Coast to international markets.
“Negotiations are never easy,” she said Thursday. “I’m confident that Petronas and British Columbia are going to come to a good agreement, one that respects the fact that British Columbians – the owners of this resource – deserve some benefit.”
Adding urgency to the standoff with Petronas, other countries are well ahead of B.C. in the race to become major exporters of LNG, and the province cannot afford to fall further behind.
B.C. is in a fierce LNG competition with Australia, Qatar, Nigeria, the United States and other countries. “Bottom line for the Canadian governments, for the aboriginal communities, is they’ve got to recognize that these projects cannot stand still. They face a whole host of global dynamics,” said Geoffrey Cann, who heads Deloitte Australia’s oil and gas consultancy out of Brisbane.
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