Take time on LNG issue to get it right
Keep calm and carry on. That must be British Columbia’s mantra as it works to create conditions necessary for the launch of a liquefied natural gas industry in the province. Premier Christy Clark may have erred in hiking expectations during last year’s election campaign, predicting the new industry would wipe out the province’s debt and bring untold riches to British Columbians.
Perhaps she won a few votes, but she did the province no favours in terms of creating a climate that would favour stiff- spined negotiations with any corporate comers.
Starting up a new industry is a daunting undertaking, as Newfoundlanders can tell you. In the 1980s and 1990s, not only did the East Coast province have to establish a regulatory and fiscal framework for an offshore oil industry, it also had to wrestle Ottawa for jurisdiction of the oil lying beneath the sea. ( The two governments in the end opted to share the jurisdiction.)
Today, Newfoundland, once the poorest province, is one of Canada’s most prosperous.
Government negotiators there, of course, carried a collective anger and frustration as they took on the giant oil companies, due to a legacy of feeling swindled by a hydropower deal with Quebec and so many startup enterprises that took rapacious public subsidies and loan guarantees, then folded. They were prepared to see the multinationals walk away. They reminded themselves the oil wasn’t going anywhere — it would stay put under the seabed, to be harvested some other day.
Because its citizens were on board, Newfoundland was able, with confidence and determination, to strike the right bargain both with Ottawa and the oil companies. The rest, as they say, is history.
Clark this week warned B. C. residents that, where negotiations with LNG companies are concerned, “we are getting down to the short strokes of it. The really hard part is coming right now for both sides.”
And, appropriately, she tempered expectations with a throne speech warning: “This is a chance — not a windfall.”
After all, the LNG market is highly competitive, and B. C. is a relative latecomer to the game.
The CEO of Petronas, Malaysia’s state- owned energy company, meanwhile has been critical of the B. C. government. Shamsul Azhar Abbas has been issuing warnings his company could walk away if B. C. fails to meet its time deadlines and expectations on a tax and regulatory framework.
But Petronas is just one among 15 potential LNG investors. And B. C. happens to be bestowed with the natural gas Petronas, and other companies like it, need to access — in transportable liquefied form — in order to generate their profits.
Projections reveal that the global market for liquefied natural gas will only expand over the next few decades.
Accordingly, B. C. should take a leaf from Newfoundland’s book. The province should continue the work it needs to do to protect the interests of British Columbians. It has an obligation to expeditiously develop fair and competitive rules and regulations without bowing to pressure from anyone.
The political opposition should be careful when criticizing government on this file not to play into the resource companies’ hands. And the public should simply let the melodrama play out with the knowledge that our natural gas bounty, under appropriate conditions, is going to be developed.