BC Business
LNG tax | BCBusiness
B.C.’s new LNG tax framework has removed one layer of uncertainty for the proponents behind 18 different LNG plant proposals along B.C.’s coast, but it is only one of many for investors expected to make final decisions over the next three years. “We don’t know today if that reduction is itself sufficient to offset all the other considerations that companies are working through,” says Barry Munro, leader of Ernst & Young Canada’s oil and gas practice. On Tuesday, the provincial government legislated a tax on LNG production that will start at 1.5 per cent and then go up to 3.5 per cent after the developers begin to see a return on their investments. That rate will increase again to 5 per cent in 2037. LNG Canada, a consortium led by Shell that includes PetroChina, Mitsubishi Corporation and Korean energy giant KoGas, said in a statement that “we are pleased to have certainty on a final B.C. LNG tax framework.”
The proponents represented by the BC LNG Alliance “appreciate the government revisiting its original tax structure,” said David Keane, president of the organization, in a statement, before laying out remaining factors that many of the 18 proponents share in looking at their final investment decision. “The LNG tax must be considered in conjunction with the overall fiscal framework,” said Keane, which involves such unknowns as municipal and federal taxes, the availability of skilled labour and global LNG market trends. Municipal tax rates remain an unknown, but they’re a minor factor in comparison with the other non-fiscal issues—from workforce availability to the environmental assessment process—that LNG project proponents will assess prior to a final investment decision, says Byron Beswick, a partner at Ernst & Young’s oil and gas practice.