LNG projects could spell disaster for B.C. if they don’t learn from Australia’s mistakes

These comments come from Petroliam Nasional Bhd. Chief Executive Officer, Shamsul Azhar Abbas.

Petronas, Mayasia’s state oil and gas company, is among energy producers hoping to build gas shipping terminals on Canada’s Pacific Coast, but is weary of the cost overruns Chevron Corp. and BG Group Plc. have been hit with at their Australian LNG projects.

Australia has about A$200 billion in LNG ventures under construction. Although this puts the country on a course to surpass Qatar as the world’s biggest supplier of the fuel, they still have A$180 billion of potential investment under threat due to high costs and increasing competition, says an industry lobby group.

“Australia introduced ‘severe fiscal and regulatory policies’ that added to the cost of doing business and negatively affected project economics there,” the report reads.

British Columbia predicts LNG activity could add $1 trillion of GDP by 2046, setting the goal of three LNG projects in operation by 2020.

“The provincial government is trying erase its debt with royalties and fees it plans to charge the LNG industry,” the report says. “The province introduced details of its tax in February and is scheduled to seek approval from legislature in the fall.”

Petronas plans to make a final decision on its B.C. project by the end of this year, and they’re talking about selling as much as 12 percent of the facility, Abbas said.

The company already reduced its ownership to 62 percent after selling stakes to companies from China, India, Brunei and Japan.

Industry leaders are predicting LNG exports from B.C. will reach 1.8 billion cubic feet a day by 2020, but they first need to negotiate access to lands claimed by aboriginal groups.

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