Monday, July 28, 2014

Petronas seeks out some Federal incentive before final investment decision

At the moment, the one LNG proposal for the North Coast that appears to have the most momentum is that of the Pacific Northwest LNG project, a major industrial terminal development that is proposed for Lelu Island.

 Petronas the Malaysian based energy company has been a presence in the region since the prospects of terminal development first started to be drawn up. Since Pacific Northwest LNG opened their downtown office on Third Avenue, Prince Rupert has seen a string of other proposals from a wide range of proponent outlined for the region.

However, for many, the Pacific Northwest LNG proposal seems to be the one that is the most advanced along the Environmental review process and the Petronas project is the one that appears to have lined up the right amount of partners in investment, clients for product, pipeline providers and gas field deposits.

All of which would seem to offer up some sign that they are getting close to their final decision on the reported 11 billion dollar investment required for the Lelu Island project.

Before they get to that point however, it would seem that Petronas is waiting for a sign from Ottawa that their investment is welcome on the North Coast.

The Financial Post outlines the nature of discussions that will take place in Ottawa this week, as a consortium led by Petronas seeks to obtain capital cost allowances for LNG development. Changes to federal agreements that could provide for a significant jump in the amount of tax concessions and allowances that the LNG proponents could realize for any projects that may get underway.

The full article on the Petronas push for the Feds and the many aspects required before the Federal government can consider the changes can be found here.

It isn't the first time that Petronas officials have issued a cautionary note towards government officials in Canada.

During a high profile LNG summit in May, the CEO of Petronas warned of the potential to break investment models through any excessive tax regimens.

We highlighted some of those discussions from the May conference here.

Part of the frustration for the International investors for the range of British Columbia LNG proposals is the nature of Canadian bureaucracy and the unknown tax situation that they might face, should they decide to move forward with their investment plans.

While on the other side of the fiscal argument, both Provincial and Federal governments are looking to find some financial reward to their coffers from the accelerated level of development of Gas reserves and the placement of terminal facilities in British Columbia.

The province in particular has made much of the financial windfall that LNG could bring to the province, though it appears that their financial notes and those of the proponents of the industry may feature a bit of a difference of fair value.

The discussions and negotiations that seem to be taking place at the moment offer up a glimpse into the many factors that go into such high stakes investment decisions and how we for the most part are just observers to the process.

Somewhere we imagine, is the sweet spot of an agreement, whether both sides find it will probably in the end decide as to whether any of the North Coast LNG proposals ever make it to the construction phase.

You can review our extensive listings of items related to LNG development here, for a more detailed review of the Pacific Northwest proposal for the North Coast see our archive page here.

No comments:

Post a Comment