Petronas Offers Canada Band Almost $1 Billion to Back LNG

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The Petroliam Nasional Bhd-led group planning a natural gas export terminal on Canada’s Pacific Coast is offering one aboriginal community C$1.15 billion ($950 million) over 40 years to approve the project.

Pacific NorthWest LNG, led by the Malaysian state-owned energy producer, is offering the payments to the Lax Kw’alaams First Nation so it can build the unit on the community’s traditional lands at the port of Prince Rupert in northern British Columbia, the native group said on its website. The deal also includes incentives from the provincial government and gas pipeline developers.

“It’s the going rate,” Art Sterritt, executive director of Coastal First Nations, an alliance of aboriginal communities on British Columbia’s northern coast, said Friday by phone from Prince Rupert. “Certainly, other communities that have LNG terminals in their territory are seeing proposals of this size.”

The Prince Rupert facility is part of a C$36 billion plan by Petronas, as the company is known, to ship gas reserves from Canada’s westernmost province by tanker to growing energy markets in Asia. Liquefied natural gas, or LNG, is obtained by chilling the fossil fuel at ultra-low temperatures to maximize the amount that can be loaded into vessels.

The 3,600-person Lax Kw’alaams community will vote on the incentive package this month, according to the Globe and Mail, which first reported the plan.

‘Reasonable Offer’

“This may sound like a lot of money, but when you spread it over 40 years and you take into account the cumulative impacts on your way of life, it’s a reasonable offer,” Sterritt said. “It really allows them to adjust to what’s about to happen.”

Pacific NorthWest is one of 19 LNG developments proposed in British Columbia. Petronas, which is awaiting environmental approval from the Canadian government, has yet to make a final decision to proceed.

“This offer represents a multi-generational opportunity to the Lax Kw’alaams First Nation in the form of careers, procurement and small-business opportunities, skills training and education,” Spencer Sproule, a Vancouver-based spokesman for Pacific NorthWest LNG, said today in an e-mailed statement.

Progress Energy, Petronas’s Canadian gas exploration unit, has proven cumulative reserves of 15 trillion cubic feet of gas, Sproule said.

A call to the Lax Kw’alaams band office wasn’t immediately returned.

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