October 20, 2014 / 9:59 PM / 4 years ago

UPDATE 1-British Columbia to unveil details of new LNG tax this week

(Adds details of new greenhouse gas emission targets)

By Julie Gordon

VANCOUVER, Oct 20 (Reuters) - British Columbia is set to unveil the details of its long-awaited liquefied natural gas tax regime within days, which could sway investment decisions on several proposed export terminals in the Canadian Pacific Coast province.

The provincial government, which is banking on the nascent LNG industry to create thousands of jobs and add billions to government coffers, has promised the legislation will be introduced this week.

That should provide some much needed clarity for companies such as Malaysia’s Petronas, which threatened this month to delay its $11 billion LNG project by more than a decade unless a favorable tax deal was reached by the end of October.

All told, there are 17 LNG terminals proposed for British Columbia’s rugged coastline, with major players like Petronas, Royal Dutch Shell and Chevron Corp all racing to build capacity to ship cheap Canadian gas to Asian markets.

So far, no projects have board approval, with the details of the province’s new LNG tax often cited as a key outstanding hurdle holding back those multibillion-dollar investments.

“This is a very pivotal moment,” said Barry Munro, Canadian Oil & Gas Leader at consultants EY in Calgary. “These are large, very complex, highly capital intensive projects where the overall returns to the project owners aren’t anywhere near as high as people initially assumed they would be.”

With the tax picture crystallizing, Petronas plans to make an investment decision on its export terminal in mid-December, while Singapore-based Woodfibre LNG is expected to decide on a smaller project in early 2015.

Proponents are looking beyond just the new LNG tax to other provincial and federal taxes, as well as carbon taxes, property taxes and levy payments to aboriginal communities, said David Keane, head of the B.C. LNG Alliance, an industry group representing six of the more advanced projects.

British Columbia on Monday introduced new greenhouse gas emission standards for the budding industry, setting a low intensity benchmark that it said will ensure the province has the “world’s cleanest” LNG facilities.

Companies will have the option of meeting targets through facility design and clean energy use, or by purchasing offsets or contributing to a technology fund.

British Columbia Premier Christy Clark has said her government is working hard to ensure the new LNG tax is not too onerous, while still providing a fair share to the province.

Her government gave a rough outline of its planned tax in February, laying out a two-tier levy that would start at 1.5 percent and climb to up to 7 percent once capital costs were recouped. Industry criticized that top rate as too high.

The final tax legislation will be introduced this week and is expected to pass before the end of November. (Editing by Jeffrey Hodgson, Chizu Nomiyama and James Dalgleish)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below