B.C. LNG backers plot to fight Ottawa’s anti-dumping Responsibility

Backers of B.C. liquefied natural gas projects say they’ll fight Ottawa’s anti-dumping duty levied on imported modules, warning that Canada is in danger of being shut out of the global LNG market.

B.C. projects large and small are concerned that a new anti-dumping tariff of up to 45.8 percent against fabricated industrial steel parts (FISC) will wipe out attempts to control costs, effectively forcing the outright cancellation of multibillion-dollar plans.

After importing modules, employees in Canada would manage the job of connecting the substantial structures. But amid low costs for the fuel in Asia, no export terminal is under construction in the state.

David Keane, president of the seven-member B.C. LNG Alliance, issued a statement on Tuesday to warning that the state’s fledgling LNG industry can not afford to pay the punitive tariffs which will primarily impact FISC imports from China and South Korea.

“Canada competes internationally for infrastructure projects of the size of the proposed LNG projects in British Columbia. To be able to move, LNG projects in B.C. can’t face extra costs that our competitors don’t,” Mr. Keane said.

“If B.C. LNG isn’t internationally competitive, we risk seeing the jobs and benefits of the value-added industry being lost to other authorities.”

LNG Canada, led by Royal Dutch Shell PLC, is one of the alliance’s members trying to get its proposed B.C. terminal exempted in the anti-dumping duty. LNG Canada has filed an application in the Federal Court of Appeal to seek a judicial review of the Canadian Industrial Trade Tribunal’s decision to deny the Shell-led group’s exemption request.

LNG Canada, which expects to build an export terminal in Kitimat in northwest British Columbia, is also requesting tariff relief from the federal Finance Department. The Canada Border Services Agency duty affects imports from China, South Korea and Spain.

“There aren’t any Canadian producers able to manufacture the huge complex modules needed by Canada’s LNG sector,” Mr. Keane said. “These modules could be enormous in size, with some weighing in excess of 7,000 tonnes and requiring specialized transport vessels. The dimension of the biggest module is equal to the height of a 12-storey construction and more than an Olympic-size swimming pool{}”

Woodfibre LNG, an alliance member using a small proposal near Squamish, held a meeting on Tuesday to discuss combatting the tariff and discovering ways to begin construction in 2018.

Another alliance member raising objections to the anti-dumping responsibility is Kitimat LNG, a joint venture by Australia’s Woodside Petroleum Ltd. and Chevron Corp, which is based in San Ramon, Calif. “Kitimat LNG has tabled its concerns about the competitive effect of FISC on the job during ongoing negotiations with the federal government,” a Chevron spokesman said.

Steelhead LNG, whose co-owners incorporate Calgary-based natural gas producer Seven Generations Energy Ltd., said the import tariff looms large over the enterprise’s plans to develop an export terminal in Sarita Bay on Vancouver Island.

“We share the concerns raised regarding the possible negative impacts on LNG investments, which will create much-needed access to crucial international markets for Canadian natural gas producers in British Columbia and Alberta,” said Trevor Boudreau, a spokesman for Steelhead LNG, which is not part of their alliance.

There have been over 20 LNG ventures pitched lately in British Columbia.

LNG Canada, Steelhead LNG and Kitimat LNG are one of the biggest suggestions to export the fuel from Canada’s West Coast to Asia.

Pacific NorthWest LNG, led by Malaysia’s state-owned Petronas, said in July that foreign exchange market conditions such as an oversupply of LNG worldwide motivated it to cancel its plans to construct a B.C. export terminal. An estimated 60 percent of the {}11.4-billion construction cost for the terminal at the Port of Prince Rupert could have been from imported modules, an industry source said.

While poor economics and other obstacles already rendered the job nonviable, the punitive tariff added insult to injury, the source said.

The Petronas-led proposal relied heavily on help from skilled workers abroad, particularly to build modules imported from Asia. Pacific NorthWest LNG prediction that in the peak of construction, it would have required 2,460 Canadians and 1,540 foreigners in the planned site on Lelu Island.

Courtesy: The Globe And Mail

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