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with the project."
The threat comes on the heels of what
Petronas perceives as a frustrating experi-
ence at the hands of the government, and a
"lack of appropriate incentives."
"Rather than ensuring the development
of the LNG industry through appropri-
ate incentives and assurances of legal and
fiscal stability, the Canadian landscape of
LNG development is now one of uncer-
tainty, delay and short vision," said Abbas.
Petronas has already proven its serious-
ness for the project; it entered the Canadian
LNG arena by acquiring Canada's Progress
Energy Resources for roughly $5 billion in
2012. The move was a first step in secur-
ing a flow of Canadian natural gas to Asian
markets.
According to Abbas, Canada is a whole
four decades behind the US in terms of
LNG development. But at the core of
Abbas' misgivings with the Canadian
process, so far, are delays in the approval
process, and the introduction of the recent
LNG tax.
Timing is key here; according to BC
Finance Minister Mike de Jong, proposed
LNG tax legislation will be introduced
when legislature resumes on October 6.
That means Petronas is putting the pres-
sure on Clark and her government to
start rewriting policy to meet with their
demands. The current LNG tax proposal
breaks down into two tiers:
• Tier 1 tax rate of 1.5%
• Tier 2 tax rate of up to 7% (the final rate
will be determined and confirmed in the
legislation)
Beyond just the tax are environmen-
tal costs and mandatory dealings that
will result in First Nations compensation.
So far, the reaction from Petronas and its
Pacific NorthWest LNG partners has been
cold, to say the least. Their impression is
that the government tax burden is in fact
very large, and that some serious explana-
tions are needed before it can make its final
investment decisions.
BC Minister of Natural Gas Development,
Rich Coleman, has played down the threat
from Abbas and Petronas. As soon as he
saw the discontent-laden report, Coleman
contacted the Malaysian giant in an effort
