You know that uneasy feeling you get in your gut when you realize you might be getting played? Well, May 20 could turn out to be one of those days for B.C.
Worlds apart — literally and figuratively — it was a busy day on the LNG front.
In Vancouver, with incredible fanfare, a 220-word memorandum of understanding was signed between British Columbia and Pacific Northwest LNG.
You’ve got to love this line from it: “Nothing in this MOU creates legal or financial obligations or liability on the Province or the Proponent.” Glad that’s cleared up.
Down Under — 13,200 km away — at the Australian Petroleum Production and Exploration Association conference in Melbourne, the tone was more sombre, even a tad threatening, in a shakedown sense of that word.
Roy Krzywosinski, managing director of Chevron Australia, was speaking at the conference and laid out some pretty blunt views on the future of the LNG industry in that country. Krzywosinski reminded delegates that “there was a potential U.S. $100 billion waiting in the wings with the associated economic benefits if the next wave of investment could be attracted.”
But — there’s always a but — Australia could miss out: “As many of us forewarned, the second wave of LNG investment for Australia — which promised to deliver further benefits — is at serious risk of not happening, at least in the foreseeable future.”
Ever so thoughtfully, he laid out some of the stumbling blocks standing in the way of Australia securing that investment, which may or may not be the same U.S. $100 billion in investments that B.C. is trying to attract.
Those obstacles included: too much government regulation, inflexible industrial relations systems, government policies that don’t support investment, high labour costs and — this is where B.C. really needs to sit up and take notice — high taxes.
It was an interesting observation on his part because, 13,200 km away in Vancouver, on the very same day (give or take the international dateline), the B.C. government said its deal with Pacific NorthWest LNG “is consistent with similar pacts in Australia.”
Effectively, the B.C. government has lowered its tax rates to be competitive with Australia, even though that country’s LNG industry is complaining bitterly that tax rates there are too high, among a fairly long list of beefs they have with the Australian government.
This doesn’t bode well for the B.C. government signing investment deals in the near future that are longer than 220 words. It also causes that uneasy feeling that we might be getting played.
There are also those “high labour costs” in Australia.
Turns out Roy Krzywosinski is quite a chatty Chevron executive. In 2008, he spoke at the American Chamber of Commerce in Australia Business Briefing Breakfast on “The Consequences of Complexity: Energy and the Environment in the 21st Century.”
One line jumps from the 33-pages of that speech: “Perhaps it is only just and proper that Chevron Australia — as well as other energy companies in this region — has a multinational workforce.”
That’s a nice way of saying “migrant workers.” It may also help explain why six years later, the B.C. government and China signed a memorandum of understanding to allow temporary foreign workers into the province to meet labour demand in the event a LNG project actually gets past a 220 word MOU.
Just when you thought that promised prosperity fund was about to be snatched from the jaws of the LNG industry, a new twist or two emerges.
Dermod Travis is the executive director of IntegrityBC.
www.integritybc.ca
@integritybc
