‹ Oil & Gas

LNG - Canadians dither, Russians build

September 24, 2013

About 10 LNG export projects are under discussion for northern BC. The BC Government is mulling over the royalty rates. Companies continue with their plans. Meanwhile, the Russians are using Chinese capital to develop a large LNG export facility in the Yamal peninsula, to be operational by 2016.

A deal between the Chinese National Petroleum Company (CNPC) and Novatek was signed in the presence of Russian President Vladimir Putin and China`s Xi Jinping during the recent G20 Summit in St.Petersburg. The new Yamal LNG project consortium will come into effect on 1 December 2013 and include Novatek (60%), Total (20%) and CNPC (20%), a press release from the Russian company states. The Yamal LNG project is based on the gas resources of Novatek`s South Tambey field. The $20 billion project includes the grand development of the Sabetta port in the Ob Bay, a facility which will be built to handle big-capacity LNG tankers. The Yamal LNG plant is to be operational by year 2016 .It will have a capacity of 16,5 million tons per year.

The BC government would like to nurse the LNG export industry to life and reap the benefits of healthy new royalty/tax streams. However industry wants to know the royalty and tax regime prior to committing to project construction. There is also an environmental angle in that carbon dioxide emissions from the LNG process may be significant.

The main LNG projects proposed for northern BC are: LNG Canada’s LNG facility that will have the capacity of 24 million tonnes per annum (mtpa); Prince Rupert LNG will have the capacity of 25 million tonnes per annum (mtpa); Kitimat LNG 10 million tonnes per annum; Douglas Channel Energy Project capacity unknown; the Pacific NorthWest LNG capacity unknown.

 

Commentary

The LNG export business is global in nature. Capital investments could easily top $20B for a BC project. Meanwhile, the Russians will be building an LNG plant in the high arctic under much more difficult conditions than exist in Prince Rupert or Kitimat.

Sources