SINGAPORE/HOUSTON (Reuters) - The LNG Canada liquefied natural gas project is on track for a final investment decision (FID) later this year, a British Columbia trade official said on Thursday, ahead of the province unveiling tax breaks geared at pushing the C$40 billion ($31 billion) project across the finish line.
British Columbia’s New Democratic government said it would repeal the province’s LNG tax, while giving LNG companies tax breaks during construction and access to cheaper power, putting them on a similar footing to other industrial sectors.
The new policy also sets strict emissions standards for natural gas businesses, as the Pacific Coast province looks to meet its pledge to slash greenhouse gas emissions by 2050.
“I think these are the right steps forward to level the playing field and enable LNG development in B.C.,” said Susannah Pierce, LNG Canada’s director of external relations, adding the emission measures were not a surprise.
The LNG Canada project is led by Anglo-Dutch Royal Dutch Shell in partnership with PetroChina, South Korea’s KOGAS and Japan’s Mitsubishi Corp.
Pierce said that while the timing of an investment decision was up to the joint venture partners, LNG Canada was on track to present the project to them in the second half of 2018.
An FID was expected in late 2016, but was delayed because of falling oil and gas prices from 2014 to 2016, which forced energy companies to slash costs and delay or cancel new projects.
With oil and gas prices recovering significantly since then, energy companies are looking to spend more on future production.
“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, said on Thursday in Singapore.
LNG Canada will initially have two LNG processing units, with a capacity to produce 6.5 million tonnes each per year. The project is fully permitted and the company has reached deals with indigenous communities affected by the development.
There was also progress at the much smaller 2.1 Mtpa Woodfibre LNG project, developed by Singapore-based Pacific Oil and Gas, Nicholas said.
British Columbia’s former Liberal government introduced the LNG income tax at a time when the province expected numerous export terminals to go ahead. None have moved to construction.
($1 = 1.2892 Canadian dollars)
($1 = 1.2916 Canadian dollars)
Reporting by Henning Gloystein and Julie Gordon; Editing by Sherry Jacob-Phillips and Peter Cooney