UPDATE 3-Petronas threatens 15-year delay of Canada LNG plant if no tax deal

Mon Oct 6, 2014 7:08pm EDT
 
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(Updates with comments from British Columbia leader)

By Julie Gordon and Scott Haggett

VANCOUVER/CALGARY Oct 6 (Reuters) - Malaysian state-owned energy company Petronas said on Monday it could delay its planned $11 billion liquefied natural gas plant on Canada's Pacific Coast by up to 15 years unless it can reach a favorable tax deal by month's end.

Petronas said in a statement that the economics of the plant are marginal and without a favorable tax arrangement with the province of British Columbia and Canada's federal government, it could shelve the project for a decade or more.

The company set a deadline of the end of October to reach a deal. "Missing this date will have the impact of having to defer our investments until the next LNG marketing window, anticipated in 10-15 years," it said.

With companies such as Petronas facing fierce competition from rapidly advancing LNG projects in the United States and Australia, the threat should be taken seriously, said Peter Tertzakian, chief energy economist at ARC Financial Corp.

"There is a trend for large multinational oil and gas companies to walk away from mega projects that are marginal and uncertain, so I don't view it as a bluff," he said.

More than a dozen LNG projects have been proposed for British Columbia's Pacific coast, with companies such as Petronas, Royal Dutch Shell and Chevron Corp leading the race to build Canada's first LNG export facility.

Chevron's project hit a bump earlier this year, after partner Apache Corp said it would sell its stake in the Kitimat LNG project to focus on domestic oil production.   Continued...