UPDATE 2-British Columbia, Petronas reach deal on Canadian LNG project

Wed May 20, 2015 5:15pm EDT
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(Adds details on terminal site, other LNG projects)

By Julie Gordon

VANCOUVER May 20 (Reuters) - Petronas has reached a deal with British Columbia related to its proposed liquefied natural gas export terminal in Canada, putting the Malaysian energy company a step closer to a final investment decision, the province said on Wednesday.

The project development agreement (PDA), which must still be ratified by both the company and the province, provides assurances on issues like infrastructure and aboriginal consultation, along with measures to ensure the project will not face onerous tax or fee increases through the contract term.

A separate royalty agreement, also announced on Wednesday, sets out minimum output targets and the long-term royalty rate for the company's natural gas production in the province's northeast.

"These agreements set the stage for a new era of economic activity and a new industry for British Columbia," Premier Christy Clark told reporters, adding that the province is continuing to build partnerships with aboriginal communities.

At roughly $36 billion, the total investment by Petronas and its partners includes the construction of the Pacific NorthWest LNG export terminal near the northern city of Prince Rupert, a natural gas pipeline and ongoing gas development.

The government deal comes a week after an aboriginal group rejected an offer of C$1 billion ($820.9 million) in return for supporting the export terminal, saying the development would harm a fish habitat next to the project site.

The company, which has made major changes to project design to address aboriginal concerns, said it is not considering alternative locations for the terminal.   Continued...