Malaysian Prime Minister Najib Razak is touting tens of billions of dollars earmarked for British Columbia by Malaysia’s state-owned energy company Petronas as a sign of Canada’s favourable business climate.
Mr. Najib said at a news conference in Malaysia Sunday that the firm’s investments for developing liquefied natural gas (LNG) exports from B.C. to Asia will total $36-billion over roughly 30 years in a “significant landmark decision.” It’s an amalgamation of previously announced initiatives, and the price tag includes the cost of a major acquisition of a Canadian company last year by Petronas.
The total is made up of nearly $11-billion for a proposed LNG export plant, $5-billion for a provincial pipeline to be built by TransCanada Corp., more than $5-billion already spent on Petronas’s December takeover of Calgary-based Progress Energy Canada Corp., and the remainder to be spent annually on natural gas wells in northeastern British Columbia and at gas processing facilities.
Mr. Najib outlined the planned investment in B.C.’s fledgling LNG sector after meeting with Prime Minister Stephen Harper just outside the Malaysian capital of Kuala Lumpur. After their bilateral meeting, the two leaders departed for the Asia-Pacific Economic Co-operation (APEC) summit in Indonesia.
Greg Kist, president of the Pacific NorthWest LNG project – 90-per-cent owned by a Petronas subsidiary – estimated there will be up to 3,500 construction jobs created to build the LNG plant in northwestern B.C., and 200 to 300 permanent full-time jobs at the facility once it opens by early 2019.
LNG fetches a hefty premium in Asia, and British Columbia is positioned to benefit. “This is about increasing the value of a Canadian resource,” Mr. Kist said.
There are still hurdles to clear. In July, Pacific NorthWest LNG applied for an LNG export licence from the National Energy Board. A decision on the application is expected by late 2013 on whether to allow the export of LNG beginning in 2019 and stretching over 25 years.
Mr. Kist said the LNG proposal will also be reviewed by the Canadian Environmental Assessment Agency. “The B.C. Environmental Assessment Office is working closely with CEAA,” he said. Mr. Kist added that no further approvals are required from an investment viewpoint since Ottawa already approved Petronas’s acquisition of Progress.
Petronas expects to make a final investment decision in late 2014 on whether to proceed with the B.C. LNG project.
Federal NDP Leader Thomas Mulcair questioned whether there will be a thorough environment assessment. “In the case of this proposed investment, what we’re saying is, ‘It’s great if we’re going to have investment that will create jobs as long as it’s going to be sustainable.’”
Japan Petroleum Exploration, which is slated to be a buyer of B.C.’s LNG, has a 10-per-cent stake in the Pacific NorthWest LNG project. It also has a 10-per-cent interest in the North Montney natural gas play in northeastern British Columbia, spearheaded by Progress Energy Canada Ltd.
Several other LNG projects are being proposed in British Columbia, and their proponents are awaiting details from the B.C. Liberal government about what the rates will be for a planned LNG export tax.
New natural gas plays are emerging around the world, and governments have to understand the impact of taxation on prospective projects globally, said Gerald Schotman, chief technology officer at Royal Dutch Shell PLC, the parent of Shell Canada Ltd., which is a partner in a joint venture to export LNG.
With files from Gloria Galloway in Ottawa and The Canadian Press