At The Gazetteer, RossK and friends are commenting about reports that Petronas does or does not aim to bail from the land of Sparkle Ponies. In my opinion, discussion of what’s been said or not said is rather pointless.
What is relevant is that the international LNG market is oversupplied and will remain that way for many years to come. Perhaps forever, if we start to listen to honest climate science. Image¹
The prices for LNG are much lower than a few years ago and oversupply dictates they will remain that way. There have been new projects coming on stream, boosting supply faster than demand. In addition, existing LNG processors can add supply at lower cost than new facilities, if demand grows.
BC Liberals have been desperate to reward the gas industry in this province. To that end, they’ve more or less eliminated the public share of revenues generated. For more than two years, the BC Government incurred more liabilities to gas companies than it received in revenue from gas rights and royalties. Additionally, BC Liberals offered tax holidays to LNG processors for years – and Governments – to come.
So, there is there is a weak, overpriced marketplace and, since there is almost no public revenue to forego, the Clark Government has only one way to provide further encouragement. Of course, that involves taxpayers paying producers to remove natural gas from the province.
Coleman and Clark should be miserable about past Prosperity Fund promises. However, in Shakespeare’s words,”Misery acquaints a man with strange bedfellows.” Coleman and Clark have been crawling in bed with unsavoury characters; Morgan, Razak and Tanoto, to name just three.
Whether LNG facilities proceed or not will have nothing to do with markets or the current financial whims of unethical billionaires. It will depend on BC Liberals’ willingness to commit tax dollars. The government that waited almost ten years to make a modest adjustment to benefits for disabled persons may become marvellously magnanimous when billions need to be placed on the table after Rich Coleman talks to LNG operators about “tightened” numbers.
Just as Liberals are having taxpayers cough up ten or more billions to build Site C for power we don’t need and cannot sell, they will have taxpayers load billions more onto public debt, just to prove the “Forces of Know” have been wrong about LNG.
They won’t borrow the money directly. It will be done in the style of public private partnerships where some non-government entity creates and holds the debt but future BC taxpayers are required to pay tens of billions by contractual commitments.
By established practice, political pundits in the mainstream media won’t count that as debt. In fact, they’ll pretend it doesn’t exist and will celebrate clever Liberals proving their opponents wrong.
¹ NASA Earth Observatory image by Joshua Stevens, using data from the EPA.