BC LNG - Even No News, is News

February 13, 2014

While expectations remain high as to the magnitude and profitability of anticipated BC LNG projects, the “who”, “how” and “where” of BC’s nascent liquid natural gas industry are being replaced with one question: “when”? A series of announcements over the past year from the BC government appear to constitute delays in the establishment of the taxation framework for the BC LNG industry.

The current tension lies between industry players who won’t commit until they know the LNG tax regime, and BC government’s challenge of establishing a tax regime that meets political expectations and pleases LNG developers who can shop for plants internationally.

The expectation is that the February 18 budget will not provide the clarity that developers are seeking as to LNG tax rates, evidenced by most recent statements in the BC Liberal Government’s February 11 Throne Speech: “This year, this government will lay out an overall framework for LNG that includes taxation, environmental actions to help make BC’s LNG industry the cleanest in the world, and First Nations benefits.” Indeed the best timing estimate of BC Finance Minister Mike de Jong was that legislation would be tabled in the fall.

But on the bright side, one must recall that LNG is a global market, and a competitive one at that. If the BC government can ultimately present an attractive and workable BC LNG tax regime, it may have been worth the wait.

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