Price could derail LNG promises: economist 0
Premier Christy Clark is embarking on a fifth trip to Asia to promote LNG, but one critic says the trade mission is more political than economic. (CARMINE MARINELLI/24 HOURS FILE PHOTO)
Premier Christy Clark announced on Wednesday a fifth trade mission to Asia to promote liquefied natural gas — a trip one critic calls a “desperate” attempt to find a deal after making lofty promises.
The Canadian Centre for Policy Alternatives released a report the same day Clark announced her trip, and the centre’s economist Marc Lee said the paper details the challenges LNG poses for the province.
LNG development was a major part of the BC Liberal election campaign and Lee said trying to fulfill the promise could be detrimental to the province’s stake in the industry.
“A lot of this to me is hanging on price,” he said, specifying the Asian market. “And I guess the danger is that the province has put so much political capital into this that they may settle for a bad deal.”
His report said the expense of building infrastructure for LNG makes the profit margin sensitive to price changes in Asia, meaning a small drop could have a major impact.
He said B.C.’s production of LNG has increased by one-third in recent years, but the price of the fuel is “in the toilet.”
Clark said the future is still bright for LNG.
“B.C. is on the right path to bring home the generational opportunity of LNG — an industry that will create 100,000 jobs and enough revenue to eliminate our debt,” she said in a news release. “To take the last crucial steps towards final investment decisions, we’re meeting with key Asian investors and governments.”
Victoria said there’s 13 LNG projects proposed for the province and eight of them already have authorization to export from federal authorities.
On Wednesday, a new LNG gas export project in Kitimat was proposed by a consortium of companies, including PetroChina, Korea Gas, Mitsubishi and Shell Canada, and is subject to conditions before any approval.
The premier’s office addressed the CCPA’s claims in a statement to 24 hours, pointing out it is currently working on getting deals signed.
“The premier has meetings with executives of companies investing in LNG projects in B.C., as well as with government officials as we work together towards final investment decisions,” the statement said.
But Lee said the province will have to do far more than talk to make sure B.C. doesn’t take a beating in the industry.
“I think the onus is on them to prove their claims,” he said. “They’re the ones who said ‘We’re going to create 100,000 jobs.’”