Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Friday, September 26, 2014

Petronas threatens to pull out of LNG project

CALGARY - B.C. Premier Christy Clark says a threat by Petronas to quit a proposed liquefied natural gas project is just part of negotiations over the province's tax take, but experts say the Malaysian firm's message should be cause for worry.

The Financial Times quotes Petronas chief executive Shamsul Abbas as saying he's ready to call off the $10-billion project to be built near Prince Rupert, B.C., amid a delayed regulatory approval process, plans by the provincial government to impose an LNG tax and a "lack of appropriate incentives."

"Rather than ensuring the development of the LNG industry through appropriate incentives and assurance of legal and fiscal stability, the Canadian landscape of LNG development is now one of uncertainty, delay and short vision," Abbas told the newspaper.

Clark told reporters in Vancouver on Thursday she's optimistic a deal will be worked out and that British Columbians will one day benefit from LNG investment.

"What Petronas is doing is standing up to try and get the absolute best deal that they can get for their shareholders. That's what they should do. What we're doing at the negotiating table is trying to get the absolute best deal for British Columbians and for Canadians. And that's the process," she said.

"And so I'm still very, very hopeful that we'll get there and a lot of the discussion that you've seen publicly is part of what you'll always see in the course of any kind of difficult negotiation. But I know they see the assets in British Columbia as incredibly valuable and a really important part of the company's future."

But B.C. shouldn't assume that Abbas's comments are just about posturing, said Barry Munro, who leads global consulting firm EY's Canadian oil and gas practice.

"There would be some people speculating that this is a negotiation tactic or that there's just a push and pull of companies trying to get to the best economic terms. You could make light of the commentary or the challenge that's been put forth," he said.

"I just think from a B.C. perspective, that would be a dangerous assumption to make. It may well be the right one. It's just a dangerous one."

There are a litany of challenges facing LNG players: pricing pressure, cost escalation and global competition among them, said Munro. So all of the right conditions must be in place for a company like Petronas to be convinced it's worthwhile to shell out billions of dollars on a project.

"I think people should heed the intended message very carefully to make sure that if they're serious about advancing the LNG business, they do whatever they can to try to address the concerns," he said.

Cameron Gingrich, director of gas services at consultancy Ziff Energy, said B.C. has to strike the right balance, lest it scare off LNG investment.

"These guys are looking at making a profitable run at it and if the B.C. government is looking to get royalties, a carbon tax and then on top of that an income tax on LNG facilities, it certainly make the economics of building a (multi) billion-dollar facility a hard pill to swallow," he said.

The government's take is a "major consideration" for any global LNG project, added James McLean, a partner in PricewaterhouseCoopers' consulting and deals practice in Calgary.

"Particularly when these large global organizations have got options as to where they place their investment dollars, the fiscal regime and the taxation regime and making sure it's clear up front is definitely critical."

Abbas is expected to visit Canada later this week.

State-owned Petronas is leading the Pacific Northwest LNG project with a 62 per cent stake. It bought Progress Energy Corp. in 2012 in a $6-billion deal that was closely scrutinized by Ottawa.

"We're still working hard towards a final investment decision by the end of the year," said Spencer Sproule, a spokesman for the project, which also includes partners from China, India, Japan and Brunei.

But Maxim Sytchev, head of research at Dundee Capital Markets, said an official decision on whether or not to move ahead with the project is likely to slip into early 2015.

There are about 15 different LNG projects proposed for the West Coast, but it's unlikely more than a handful will be built. Pacific Northwest LNG has been perceived as one of the frontrunners in the race to export natural gas, chilled into a liquid state, to Asia on tankers via the West Coast. So too is a proposal led by Royal Dutch Shell, which aims to build its LNG Canada terminal to the southeast, in Kitimat, B.C.

The fate of another major project, called Kitimat LNG, was called into question this summer when one of its partners, U.S. firm Apache Corp., announced it was getting out of the LNG business. Apache's partner, fellow U.S. energy giant Chevron Corp., has expressed no interest in moving forward with the plan on its own, so it must now find a new partner.

But Chevron's CEO said earlier this month that finding a new partner for Kitimat LNG is just one hurdle it has to clear before the project can move ahead. John Watson said it needs sales contracts with customers, clarity concerning British Columbia's fiscal regime, more knowledge of its resource potential in northeastern B.C. and support from First Nations.

Original Article
Source: nationalnewswatch.com/
Author:  By Lauren Krugel 

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