Shell to Chevron Push for Better Terms for Canada LNG

A group representing billions of dollars of liquefied natural gas projects from Royal Dutch Shell Plc to Chevron Corp. is urging Canada and British Columbia to improve conditions for the investments to go ahead.

“A new LNG industry in British Columbia is not a foregone conclusion,” David Keane, president of BC LNG Alliance said today in a speech in Vancouver. “If LNG is to be a viable industry in B.C., each level of government must come together with our industry and make some difficult decisions.”

Petroliam Nasional Bhd., Malaysia’s state-owned energy company and a member of the alliance, is among companies pressing governments for tax breaks and improved financial terms to justify construction of LNG terminals to supply gas from western Canada to expanding Asian energy markets.

The group represents four LNG projects, including one led by BG Group Plc. Apache Corp. is Chevron’s partner in one of the proposed shipping terminals. The other two are led by Petronas, as the Malaysian company is known, and Shell with several partners.

Petronas this week said it may delay construction of its C$10 billion ($9 billion) Pacific NorthWest LNG project past 2030 unless proposed taxes are lowered this month.

“The window of opportunity to sell B.C. LNG into global markets is closing,” Keane said today at a conference organized by the Vancouver Board of Trade. British Columbia’s “cost structure holds the potential to to reduce our members’ competitiveness and their ability to succeed in the global market.”

Petronas needs commitments to lower taxes by the end of October to meet its mid-December target for a decision on the shipping terminal, Chief Executive Officer Shamsul Azhar Abbas said Oct. 6 in an e-mailed statement. The project is scheduled to start operating in 2018.

Canada Costs

Costs to develop LNG are higher in Canada than elsewhere because of proposed taxes, pace of regulatory reviews and higher prices charged by contractors, Shamsul said.

British Columbia Premier Christy Clark is confident Petronas will decide to proceed with the project, she said last week after meeting with Shamsul in Vancouver.

The meeting followed similar warnings about the viability of the Canadian LNG project by Shamsul in an interview with the Financial Times of London.

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