The BC government recently indicated that it will delay the announcement of the tax regime for the province’s emerging liquefied natural gas (LNG) sector.  Minister of Natural Gas Development Rich Coleman had previously indicated that the province was close to finalizing applicable tax rules and expected to provide details by the end of November.  The Minister now indicates that more time is needed to complete related consultations with the various LNG proponents.

As noted in our prior blog post, the BC government has promised to establish an LNG “Prosperity Fund” that would accumulate over $100 billion in revenue over a 30-year time frame.  Since then, the BC government has been in discussions with LNG proponents in order to better understand their business models and to formulate a tax regime that will be effective and efficient in the circumstances.

The setting of LNG tax rates was expected to be challenging.  The BC government needs to balance the desire for generating provincial revenue from the LNG industry, while ensuring that the LNG tax does make BC-based LNG projects uncompetitive and divert investments to other gas-rich countries.  Despite the delay, Minister Coleman has emphasized that details of the LNG tax will be made available well before the LNG proponents are scheduled to make their respective final investment decisions.