The Government of British Columbia has done everything in its power to clear a path for the Liquefied Natural Gas (LNG) industry, and yet stands in the path of oil pipelines to the West Coast. This single-minded pursuit may prove to be a foolish mistake.
In July, B.C. MLAs headed into the legislature for a rare summer session to enact legislation clearing the way for the province’s first LNG plant.
The government ratified the project agreement with the Pacific NorthWest LNG consortium, led by Malaysia’s state-owned energy giant Petronas, for the multibillion-dollar facility near Prince Rupert. Once complete, the facility would allow the shipment of B.C. gas to Asia in liquid form.
Premier Christy Clark has been a champion of LNG development in her province ever since she clinched the 2013 election largely by trumpeting the economic benefits of the industry. The Pacific NorthWest facility alone could bring in as much as $8.6 billion in new revenue by 2030 through taxes and royalties, the Liberal government has said.
The project still faces several hurdles, including opposition from First Nations over environmental concerns, the need for federal environmental approval and slumping LNG prices in Asia.
But a major political scandal involving the prime minister of Malaysia, a mysterious $700 million in funds that showed up in his accounts and the ensuing turmoil in the South East Asian country, is one challenge that was likely not on the B.C. government’s radar when it went to bat for the industry.
Malaysian controversy grips the nation
The details of the case remain far from clear, but the state-owned, deeply indebted 1Malaysia Development Bhd, cited in the Wall Street Journal as a possible source of the funds, is being investigated by the Malaysian Anti-Corruption Commission. The commission, meanwhile, stated that the funds came from legitimate sources – donations to Prime Minister Najib Razak. The political situation in the country is precarious. Amid questions over the toll the scandal is taking on his country, Razak went on the defensive last week, saying while Malaysia isn’t perfect, that doesn’t mean it is a “failed state,” as one observer pegged it.
With so much at stake with the Petronas-backed LNG project, it would be advisable for the B.C. government to pay attention to how the scandal rocking Malaysia might affect its big LNG play with the state-owned company (B.C.’s Finance Minister Mike de Jong landed in Malaysia to tout the Petronas deal with top government officials just as the scandal was breaking in July).
One criticism of Clark’s government that has already in emerged in the Malaysian country strikes a particularly ironical note.
A member of the opposition DAP party is making the case that with oil and gas prices sinking and the country’s economy shrinking, backlash to the Petronas LNG project – set to create 4,500 jobs at peak construction in B.C. and hundreds more long-term positions in the Canadian province – is growing in Malaysia.
In an interview with the Tyee, Ong Kian Ming insists Malaysians want Petronas to turn its attention back home to domestic projects to help rejuvenate the country’s own economy and add new local jobs.
Moreover, he said, the company still needs assurances from Canada about environmental and regulatory standards.
“If [Petronas] feels that the local concerns and environmental hurdles are too difficult to overcome, it could pull the plug on the project,” he told the Tyee.
One might even say Malaysia is demanding its “fair share” of economic benefits and assurances of “world-leading” environment protection.
Sound familiar, Premier Clark? With the turmoil in Malaysia, the premier might want to hedge her bets by encouraging pipeline construction, instead of pursuing a one-track course to economic development.
— By Jamie Gradon, Manager of Communications