Gastech News recently interviewed by phone Ron Ezekiel, a partner with Fasken Martineau’s Global Energy Group on Canada's LNG industry and key issues around LNG project development. Here are his views:
Gastech News: Can you please list 3 top impacts on LNG exports from Canada’s fiscal regime?
Ron Ezekiel: "Well, we don’t have any exports yet so it may be more like a single big impact and that’s whether the fiscal regime is sufficiently competitive with other LNG producing nations to attract the capital required to make Canadian LNG a reality. I’d like to think that the fiscal regime is competitive. Certainly the BC government has put in a lot of time and energy into the process. They’ve studied how BC’s fiscal regime compares globally and in my opinion some of the recent delays of projects moving forward are less about the actual regime and more about the timing of clarity around it. It’s taken some time for both our provincial government and our federal government to nail down the details. BC had announced a two-tier tax but specified the second tier as only up to 7%. And it wasn’t until last October that they specified that second tier tax rate at 3.5% which was a benefit and a reduction to the industry and made the regime more competitive. Even now there are still more details to come but I think we’re finally in a place where the fiscal regime is sufficiently clear, that companies can actually start to price the impacts of that regime in to their projects and start making some decisions."
Gastech News: The government has recently announced tax plans to support the country’s emerging LNG industry, will this encourage investments?
Ron Ezekiel: "Oh it certainly will. The federal government here recently announced plans to give LNG facilities an accelerated CCA [or Capital Cost Allowance] and that basically means proponents will be able to depreciate certain assets related to the LNG facilities faster than they otherwise would have. And that means proponents will pay less tax in the early years of their projects because they will be able to claim their CCA quicker. It isn’t an overall reduction in the tax burden, its just moving up some of the write-offs that they would’ve been able to claim later. That will make the large capital expenditures required for the projects more palatable to investors for sure. It was a smart move and one that should help the industry move ahead."
Ron Ezekiel from Fasken Martineau’s Global Energy Group spoked at the Canada LNG Export Conference last week in Calgary. The Canada LNG Pavilion at Gastech is supported by the Government of Canada, British Columbia Government, Alberta Government and Nova Scotia Government.
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