British Columbia to Outline Carbon, Tax Policies for LNG

British Columbia plans to introduce measures next week to tax planned liquefied natural gas projects and limit emissions blamed for global warming after months of talks with developers such as Royal Dutch Shell Plc.

The government of Canada’s westernmost province, led by Premier Christy Clark’s Liberals, will introduce its policy on greenhouse gas emissions on Oct. 20 in the legislature, followed by a tax specific to the LNG industry the next day, Rich Coleman, minister of natural gas development, said in an interview today.

Some of the world’s largest energy companies including Shell, Chevron Corp. and Petroliam Nasional Bhd. are pressing the government for clarity on taxes and other costs so they can decide whether to invest billions of dollars on coastal terminals to chill natural gas for shipment to growing Asian energy markets. The 18 LNG proposals in B.C. are vying with projects in Australia, Mozambique and the U.S. Gulf Coast.

“We promised them we’d have it done by this fall and those two things are getting done next week,” Coleman said today in Surrey, British Columbia. “Industry can look now and say, ‘Now, we know the game.’”

LNG proponents also have been seeking favorable tax treatment and beneficial labor polices from the government of Canada.

Clark said she planned to tax the LNG industry in February 2013 and a year later, proposed a draft policy to apply a levy of 1.5 percent on profits initially and as much as 7 percent after developers recover capital costs.

Liberal Legislation

“The B.C. government, as much as they’re being diligent to get these things out, they’ve had two-and-a-half years to get an LNG tax structure,” Bruce Borwick, a vice president of the Woodfibre LNG Ltd. project backed by Indonesian billionaire Sukanto Tanoto’s RGE Group, said Oct. 15 at a conference in Calgary.

“We need to see a clear, competitive pricing structure,” he said. “We’re not there yet.”

With a majority among provincially elected officials in British Columbia, the Liberals are able to pass legislation regardless of the position of opposition parties.

Michael de Jong, the Liberal house leader in the legislature and minister of finance, will decide when the measures are introduced next week, Coleman said.

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