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Seventeen B.C. LNG project proposals have been announced so far, including a plant and marine terminal in Kitimat, B.C. (model shown).Robin Rowland/The Canadian Press

Canada needs to open its oil and gas industry to skilled workers from China and elsewhere to address a labour crunch, says the Chinese partner of the Petronas-led consortium planning a liquefied natural gas export project in British Columbia.

Without policy concessions from the Canadian government, "many projects will drop," said Feng Zhiqiang, executive vice-president of Sinopec International Petroleum Exploration and Production Co., a subsidiary of the Chinese oil and gas giant.

Petronas, the Malaysian state-owned energy giant, this week threatened to pull its $36-billion Pacific NorthWest LNG project unless B.C. introduces a competitive tax and regulatory regime.

Now, a key Petronas partner is warning a shortage of skilled workers puts projects at risk.

"You have a very limited number of people. If one [LNG] project starts, it already will not be enough," Mr. Feng said in an interview in Beijing. Canada simply does not have enough people to construct the many proposed complex projects on the British Columbia coast, particularly with the ever-expanding oil sands in Alberta already drawing vast numbers of skilled workers, he said. Letting workers in from China, Europe and the U.S. would "resolve some of the costs and the problems, the shortage of technical people," he said.

Proposals to bring foreign workers to Canada are controversial. Criticism of Canada's temporary foreign worker program prompted Ottawa to recently tighten rules. Efforts by a Chinese-backed mining company to run its northeast B.C. property with imported labour met fierce resistance last year.

The B.C. Ministry of Natural Gas Development said Friday that its top priority is to ensure British Columbians are first in line for LNG jobs. "Some jobs will not be filled by British Columbians, either because they require highly specialized experience in the LNG industry or because we do not have enough workers in the province to meet the level of demand," the ministry said. "Our priority in filling those jobs includes making sure British Columbians are first in line for job opportunities, then Canadian workers, followed by U.S. and international workers."

Jason Kenney, the federal Minister of Employment and Social Development, has said Ottawa expects LNG developers to use Canadian labour, resorting to temporary foreign workers only rarely to meet specific needs.

New rules require employers who want permission to bring in foreign workers to prove they have advertised aggressively across Canada to fill the positions, and to submit a plan to replace any foreign workers hired with domestic ones over time. The federal government has capped the percentage of foreigners on any project at 30 per cent of the work force.

Mr. Kenney's spokeswoman said Friday that LNG projects are no exception, despite warnings from industry that the potential for labour shortages and cost inflation could deter investment.

Sinopec has significant oil and gas holdings in Canada, with large shale gas resources through its ownership of Sinopec Daylight Energy Ltd., oil sands exposure through a minority share in the Syncrude project. and a 15-per-cent stake in the Pacific NorthWest LNG export venture.

It's still possible for Canada to have several LNG export terminals go forward, Mr. Feng said, if the terms are right. But if the question on costs – which touches both government taxes and the labour issue – is not resolved, construction plans could be abandoned. "That's the reason companies are watching instead of investing," he said. "And you see some companies are probably thinking about withdrawing."

Alex Ferguson, vice-president of policy at the Canadian Association of Petroleum Producers, said that even after giving job priority to Canadians, skilled foreign workers will be required to ensure B.C. LNG projects get built in a timely manner. "We know that we need to build our work force capacity. It is a potentially valuable tool in the toolbox."

With files from Shawn McCarthy in Ottawa

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