• 11 hours This Will Be the Answer From China On U.S. Tariffs
  • 7 hours Bad News For The Climate: Coal Burning, And Carbon Emissions, Are On The Rise Again
  • 10 hours Snowden Reveals Bitcoin Transactions Being Tracked by NSA
  • 17 hours Getting out of oil .. now
  • 1 day Too much or doable - $900 Billion Annual Investments Needed In Renewables By 2030
  • 8 hours Twitcoin....
  • 1 day Elon Musk’s $2.6 Billion Tesla Challenge
  • 16 hours The Facebook/Cambridge Analytica Scandal
  • 1 day U.S. Arrests Iranian Over Alleged $115 Million Sanctions Evasion Scheme Involving Venezuelan Housing Project
  • 15 hours Surprise! Aramco Scraps International Listing Plans
  • 13 hours EU Proposes Online Turnover Tax For Big Tech Firms
  • 19 hours U.S. Judge To Question Big Oil On Climate Change
  • 5 hours Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 1 day CERAweek Meeting
  • 1 day Bad seven days for Martin Shkreli
  • 1 day Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
Alt Text

The Battle For China’s Growing Gas Demand

Russia’s natural gas giant Gazprom…

Alt Text

Natural Gas Exports Could Be Hit By Trump’s Trade War

President Donald Trump’s controversial tariffs…

Joao Peixe

Joao Peixe

Joao is a writer for Oilprice.com

More Info

Trending Discussions

Supermajors Balk at Canadian LNG Profit Tax

Supermajors Balk at Canadian LNG Profit Tax

Oil and gas companies hoping to win big on Canada’s nascent liquefied natural gas (LNG) export industry are balking at a new gas tax proposed for British Columbia that is great for the province but tough on the industry wallet.

Profits from LNG projects will be taxed at an initial rate of 1.5%, under the proposal, British Columbia Finance Minister Michael de Jong told reporters on 26 February. The rate will rise to as much as 7% after companies recover the costs of building the shipping terminals.

A 7% levy on profits works out to a $0.50/MBtu surcharge, Ziff Energy analysts say - "not a small number when you consider there's a lot of competition out there."

Related Article: Small Companies Poised to Ride Canadian Natural Gas Wave

Shell Canada and other supermajors in this game say the proposed tax could hinder the province’s competitiveness.

"We need something that’s globally competitive if we, in British Columbia, are going to build an LNG industry," said Shell Canada spokesman David Williams.

Shell Canada has proposed a $12-billion plant in Kitimat, with partners PetroChina, Korea Gas and Mitsubishi. The project already has federal export approval and is now awaiting environmental assessment. A final investment decision (FDI) could hinge on the new tax policy.

Exxon Mobil and Chevron are also eyeing British Columbia LNG projects—and all were looking for clarifications of pending tax policies, which has now arrived however unwelcome.  

But provincial officials see a chance here to bring in up to $1 trillion by 2046 through the LNG sector alone.

The attraction, despite the tax proposal, is clear: there is plenty of money to be made shipping low-cost Canadian gas to LNG-starved Asian markets, where it fetches a much higher price.

Related Article: Why Europe Won't See Canadian Crude Anytime Soon

And, as provincial officials have been quick to point out: British Columbia tax and royalty rates as proposed will still be lower than in Australia and the US—at least in the five states competing with LNG projects in the sector.  

BC Finance Minister Jong’s response to the supermajor balking is to take it in stride.

“Of course they want zero,” he said, but the proposed tax regime still puts British Columbia ahead of its potential competitors.   

The province of British Columbia is promising tax legislation this fall, and is expected to reveal more details about environmental regulation and benefit-sharing plans for First Nations this spring.

By Joao Peixe of Oilprice.com

Back to homepage

Trending Discussions

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News