Malaysia’s Petronas warned that it may pull out of its $10 billion liquefied natural gas export terminal in British Columbia because of proposed taxes and regulations that would impact LNG projects in the province.
Petronas’s chief executive Shamsul Abbas said the future of the project remains “uncertain” and he doubts the firm will make a final investment decision by the end of the year.
Abbas said the company’s decision will be determined by whether or not the British Columbia provincial government implements the new measures this year.
The British Columbia government is considering a two tiered tax system that would tax LNG at 1.5 percent after liquefaction starts and 7 percent after a project’s capital costs have been recouped.
The government is also proposing new levies, indirect taxes and hard limits on greenhouse gases.
Abbas said that Petronas hasn’t committed to final investment for the project due to a “lack of appropriate incentives.”
Government officials said the LNG tax measures will be revealed in October and could be approved by the end of November.
“Canada has to buck up real fast to be a credible global LNG player if it wants to be taken seriously by potential investors,” Shamsul said.
Petronas will move forward with planned financing and evaluation until a final decision is made.
The terminal is part of a larger facility called the Pacific NorthWest LNG that is projected to cost upwards of $36 billion.
Petronas told Reuters that it needs to be “assured that the project is economically viable and satisfies its investment criteria before going ahead with the project.”
In 2012, Petronas bought Calgary-based Progress Energy Resources in a deal worth $5 billion in order to expand its shale gas assets.
The company would use the British Columbia terminal to export supplies to Asia from its North American assets.