B.C. Premier Clark says Petronas LNG project still has hurdles to overcome

TORONTO – British Columbia’s premier said Monday the province’s multibillion-dollar agreement with Petronas to build a liquefied natural gas terminal is “done,” while acknowledging the Malaysian energy giant still has hurdles to overcome before the project can go ahead.

Petronas announced last week that it was putting off construction of its proposed LNG terminal near Prince Rupert, B.C., even though it was pleased with recent moves the province made to make the nascent industry more competitive.

Christy Clark said in Toronto that the province had completed all of the elements of a project development agreement with Petronas.

“We are done with Petronas. What they need to do is make sure the market conditions work for them in terms of their suppliers.”

Some officials in the B.C. government have suggested that the delay is a tactic by Petronas to get a better deal from the suppliers.

The Malaysian firm’s investment of $36 billion for the Pacific Northwest LNG project covers the LNG plant, shale fields in northeastern B.C. and a pipeline to connect the two.

Petronas acknowledged last week that the government had “brought resolution to key policy matters,” such as establishing a tax regime for LNG firms, detailing offsets for greenhouse gas emissions and gaining support from First Nations.

But still, the company said the conditions aren’t right to proceed with the project.

“These are long-term decisions. These guys aren’t thinking of what is the market today. They are thinking of what is the market five years, 20 years, 25 years from now,” Clark said.

Asked whether she was concerned about plunging energy prices, Clark stressed the need to diversify provincial economies so that they are no longer solely dependent on one or two commodities.

“And in British Columbia we have done that. We have a highly diversified economy.”

Her New Democrat critics, however, argue that she is the one putting all her eggs in one basket in promoting the LNG industry.

Earlier Monday in a speech to the Economic Club of Canada, Clark acknowledged that commercial circumstances have to be right for Petronas and everyone else to reach final investment decisions.

“But Petronas agrees with us that we have done our part to make sure B.C. is competitive on the global stage, offers certainty to investors, and to make sure British Columbians benefit from the export of a resource they own.”

Other partners in the project are China Petrochemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. and Brunei National Petroleum Co.

Note to readers: This is a corrected story: A previous version misquoted Clark as saying the project was a “done deal” when Clark actually said that the B.C. government’s agreement with Petronas was complete.