British Columbia Offers Tax Breaks To LNG Canada Project

The British Columbia government is offering the LNG Canada project tax breaks that boost the chances of the plan to get a final investment decision from its joint venture partners later this year.

According to the new fiscal framework, LNG Canada will be subject to relief from the provincial sales tax (PST), in line with the policy for manufacturing sectors, subject to repayment in the form of an equivalent operational payment. The B.C. government will also offer general industrial electricity rates like the ones the other industrial users in B.C. pay. The province will also eliminate the LNG income tax, while it will exact new greenhouse gas emission standards from the project under its Clean Growth Incentive Program.

“The LNG Canada proposal has the potential to earn tens of billions of dollars and create thousands of jobs for British Columbians over the life of the project,” Premier John Horgan said on Thursday. “It’s a private-sector investment that could benefit our province for decades to come, but not at any price – we need to make sure the values British Columbians believe in come first,” added the Premier of the province which is in a rather impassioned dispute with Alberta, the heart of Canada’s oil production, over the Trans Mountain oil pipeline expansion project.

For LNG, however, B.C. wants to put natural gas development on a level playing field with other industrial sectors as LNG Canada is “moving toward a final investment decision on a project that, if approved, would be the largest private-sector investment in B.C. history.”

LNG Canada—whose joint venture partners are Shell, PetroChina, South Korea’s KOGAS, and Japan’s Mitsubishi Corporation—welcomed these measures “which we believe will promote access for natural gas from BC to be exported as LNG to the fastest growing economies in the world. The measures announced today will be important to our effort to submit a competitive proposal for our Joint Venture Participants’ decision-making,” LNG Canada said.

In July 2016, LNG Canada’s joint venture partners delayed the final investment decision (FID) that was expected by end-2016, due to “global industry challenges, including capital constraints,” saying that it would need more time to evaluate the project.

“Shell seems to be targeting FID in the fall [of 2018]. That would be very welcome since the first of such projects is always the hardest,” Michael Nicholas, managing director at the International Trade and Investment Office for British Columbia, told Reuters on Thursday.

By Tsvetana Paraskova for Oilprice.com