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LNG exports: the subsidy pressures mount

Re: Asian buyers want cheaper BC gas

Can't miss the main message in this story: Christy Clark must mark down the cost of BC's LNG, or the Asian market won't be there, the companies hoping to produce LNG in BC won't sink the capital in, and her promises to deliver the pot'o'gold in time for the election in 2017 go pffft.

Of course, the buyers' are negotiating. This is "a good sales talk" as is suggested in the article, but it's also true that they are negotiating for the best price. If BC doesn't deliver it, then "pffft."

Christy Clark can do nothing about the international price mechanisms for natural gas. All she can do is shave costs for gas producers and pipeline builders and operators, and LNG plant builders and producers. She has a treasury full ... no, correct that: empty, actually - she has no money to give away anymore. She has control over a large number of tax and royalty related factors whereby she can reduce the immediate or long term costs of producing LNG.

Watch her, and Mike Coleman and Bill Bennett roll some of these out in the coming months. Some of these will be large and disgraceful giveaways - so expect them to slide in as quietly as possible, or with such fanfare and bluster that we might be tricked into thinking they're good for us.

Think of it this way: if Shell or Chevron or Petronas or Apache are happy, you have good reason not to be.


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