Russia undercuts B.C. with mega gas deal 0
A major LNG conference in Vancouver this week is overshadowed by a $400-billion deal that could see Russia selling natural gas to China for 75% less than B.C.'s price. B.C. Premier Christy Clark received a standing ovation Wednesday, May 21, 2014 in Vancouver, B.C. (CARMINE MARINELLI/ 24 HOURS)
"Clearly a big deal like that coming through a pipeline, not being transported such a long way, makes it a bit challenging for B.C." — NDP natural gas critic Robin Austin
Premier Christy Clark received a standing ovation Wednesday at a sold-out Vancouver conference focused on her key economic plank — liquefied natural gas.
Clark is promising an LNG rush, but questions about B.C.’s competitiveness were raised Wednesday after the signing of a $400-billion deal in which Russia will supply China with natural gas via pipelines, as opposed to LNG transported by ship from B.C.
The big question is what price Russia agreed to.
University of B.C. professor Hadi Dowlatabadi told 24 hours Russia can sell the fuel for a quarter of what B.C. can.
“LNG is always more expensive than natural gas in pipeline form,” Dowlatabadi said. “The question really is how much gas will Canada be able to sell and at what price?”
According to Reuters, Gazprom CEO Alexey Miller declined to say at what price the deal was struck, but sources at the companies involved said Gazprom refused to go below $350 per thousand cubic metres. Russian newswire Interfax backed up that number, estimating a price of $350 per 1,000 cubic metres.
Natural Gas Development Minister Rich Coleman disputed reports that Russia may fetch a quarter of the price for LNG than B.C. is hoping for.
“We're OK competitively,” Coleman told 24 hours on the conference floor. “The Russia deal's really in its infancy. When I was in China last time, the companies … said even if there was a deal to do a pipeline from Russia, they felt that they would still need the North American and rest of the world markets to supply demand.”
New Democrat natural gas critic Robin Austin, who attended the conference, said the Russia-China deal is a “concern.”
“When you see a deal of this size, it could potentially move the market in Asia,” Austin said.
Clark added that “most of the people here considering investments” knew a Russian deal was in the works, but that it in no way hampers B.C.'s yet unrealized hopes of cornering the Chinese market.
“I don't think there is a country in the world that today wants to depend on Russia as their sole supplier of natural gas,” Clark told reporters. “We intend to be very, very competitive … Remember, China needs a lot of natural gas.”
The three-day LNG in B.C. Conference is being attended by most of the LNG industry's biggest players, and comes on the heels of a consortium led by Shell announcing a major design contract for a $12-billion plant in Kitimat.